Today will be the 28th day of the rally out of the February 5th bottom. We are now in the trading band for the daily cycle in stocks to bottom. (The cycle rarely lasts much longer than 35-40 days.) So like I said in my last post we are due for a short breather any time now.
The consensus seems to be that the market will hang in till the end of the month. It may, but I tend to think we’ve probably seen about all the upside we are going to see at this point.
The leading tech sector is pushing up against a major resistance level. I doubt this level is going to be penetrated on the first try.
It’s time for RSI to make a trip back down to the oversold levels. (Daily cycle bottoms almost always push the 5 day RSI into oversold levels.)
Starting sometime next week the market should begin a minor profit taking correction to ease overbought technical and sentiment levels.
I expect this will rub off on the precious metals sector as well (it almost always does).
That should result in a 1-2-3 reversal process in the miners and gold.
The expectation is for both gold and miners to hold above the February lows and then move to higher highs as the market rallies out of the cycle bottom.
I wouldn’t be surprised if markets bottom on the next employment report on Apr. 2nd. That would allow the market to ease the overbought conditions and set it up for a powerful rally through earnings season.
So I guess it’s possible the market hangs on till the end of the month but I doubt it. I suspect we are going to start to see weakness next week.