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Erik McCurdy
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Erik is the senior market technician for Prometheus Market Insight and has been performing chart analysis since 1995. The software program that he developed to monitor long-term stock market trends has correctly identified 92% of the cyclical turning points in the S&P 500 index since 1940. His... More
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  • Severe Stock Market Decline Remains Likely 1 comment
    Apr 11, 2013 1:45 AM | about stocks: SPY, DIA, QQQ

    Yesterday, our cycle analysis identified the potential development of a short-term low in the stock market. Today, a cycle low signal was generated, confirming that a new short-term cycle has begun.



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    Although short-term cycle translation remains bullish, the uptrend from November has moved higher at an unsustainable rate and the rally is now extremely overbought.



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    Moves that occur in the direction of the primary trend, which in this case is up, often take the form of a five-phase wave. The advance off of the low in November is a typical example of this type of move and the fifth and final phase is nearly complete. Therefore, a meaningful reversal could occur at any time.



    (click to enlarge)

    Moving out to the intermediate-term view, the rally off of the low in November marks the second time that the angle of ascent has increased following the low in late 2011. The cyclical bull market from 2009 is moving higher at an unsustainable rate and it will likely be followed by a violent overbought correction.



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    Additionally, the latest intermediate-term cycle high (ITCH) is long overdue and it could form at any time.



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    The formation of the overdue ITCH would be a potentially important long-term development because, given the extremely long duration of the current cyclical bull market, a confirmed intermediate-term high is also a potential cyclical high.



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    The character of the forthcoming correction will provide the next assessment of bull market health and determine if the latest ITCH is also a likely cyclical top. Therefore, it will be important to monitor price behavior closely during the next several weeks.

    We will identify the key developments as they occur in our daily market forecasts and signal notifications available to subscribers. Try our service for free.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: SPY, DIA, QQQ
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  • lostsailor
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    Comments (4) | Send Message


    Do you ever consider that your models are no longer relevant based on historical data since we are in a time of unprecedented government and corporate manipulation as well as development of the Internet/mobile based economy. Sorry for the vagueness but I don't want to spend all day outlining all the details as I'm sure you know what I mean.
    11 Apr 2013, 02:40 PM Reply Like
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