There are 5 stage of economy cycle, they are contraction: 1. early; 2. late, expansion: 1. early; 2. middle; 3. late. We are at early stage of contraction. The market has been down since Oct 2007 for 4 months. It matches the chart from Sep 2000 to Jan 2001 on S&P. This also marks the 1945-1996 statistics data on average down percentage. So it might start a pause and watch phase. Also the average down trend based on the history data is 7 months.
Therefore, I will have to pause and watch too. In the next 3 months, the market can go either ways for the short term. But the mid/long term trend is still down. I expect there will be another leg down. So the bias is to play the down trend for new low. After that, there might be a mid term rally, followed by a mid/long term down turn to retest the new low during or after summer time. Then we will have a huge leg up to close near flat for the whole year.
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