OPENING POSITION
There was a lot of excitement toward the end of February when the Dow Jones Industrial Average tapped 13,000 � and that was as it should be, given that the index hasn’t seen those levels since 2008. That surge upward was a typical example of how market participants react to good news. In this case, it was due to the decision on the part of the European Union to bail out Greece from its debt distress once more. This was particularly significant, since doing so brought some relief to the crisis that has been looming over Europe for quite a while. But let’s not get too engrossed in the good news, because there’s always bad news that follows.
Am I being pessimistic? Not really. Markets tend to follow cyclical movements, alternating between troughs to peaks. When we are in the midst of a move toward a peak, we tend to forget that there’s also the existence of a trough. For the first couple months of 2012, the markets have been trending up and down within overbought territory. But we are still only a few months into the year, and that hasn’t been long enough for us to forget the gloomy times in the market. It is only a matter of time before we see some sort of a correction in the short term, but at this point I am inclined to think that the correction will be very modest.
The reason for my thinking is that if you look at the bigger picture, it appears as though we are in the midst of a cyclical up move that still has more upside movement to come. And that trend will continue till the cyclical move reaches its peak. So the question is, how much longer will it be before the move hits that peak?
To find out, we spoke with cycles expert Stan Harley, publisher of The Harley Market Letter. His years of analyzing market movements and conducting in-depth statistical analysis have given him the confidence to forecast market movements. The interview starts here. It is refreshing to come across experienced traders because they have so much conviction in what they say. They have a firm understanding of the markets and if they see an opportunity, nothing holds them back from jumping into a trade. They know what to do when the trade goes their way and they know what to do when it doesn’t. And they are willing to explore new ideas and try out different things to help them become even better traders.
This is what we should all strive for. So when the Dow hits 13,000, 15,000, or higher, for that matter, you know what to do.
Jayanthi Gopalakrishnan, Editor