Saturday, January 26, 2008


Probability model for the Russell 2000 seems to confirm our thinking on an intermediate term rally of some substance.

Blue bars are current market

Black are Markets History

This model also shows a test of the lows (not on this chart) after the rally is complete.

While we saw some profit taking on Friday, it did not take us by surprise as we were looking for the higher opening to complete the first micro short term up trend.

It is very possible that we saw all of the corrective forces we were going to see on Friday as the market was able to achieve a little more than a 38% correction. There is still the possibility of a 50 or 62% correction, but should this be the case it will afford us the luxury of adding to our equity exposure.

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