Dominating Chart Patterns Suggest the Cycle is Failing

Author Larry Berman

Posted: 12 July 2012 re-posted from etfcm

The earnings pre-announcements are clearly having an impact on the S&P 500′s investor psychology. The developing dominating chart patterns at this point, nearly three and one half years into a stimulus induced “economic recovery” with very little natural momentum, suggest that the cycle is failing and that recession is a growing risk. Odds are increasing that with the fiscal cliff overhanging the Presidential elections, while we could see a more traditional rally into the election, the flip side of the trade could be increasingly volatile on the downside.

For now, a dip below the 200-day average is likely the next best buying opportunity and we have our powder pretty dry for that. It seems increasingly unlikely that we see sustainable new highs with the global economy slowing so rapidly. True, we are seeing stimulus measures, but increasingly they are having a muted impact.


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