eChristopher Carolan, Editor
On Time Update
24 January 2005
ROCKY BOTTOM
U.S. stocks are trying to form a low here, as evidenced by the divergences in my tick-based indicators. However, the Spiral Calendar algorithm date cluster is not due until the end of this week. This bottoming formation is likely to be rocky and take additional days with lower lows yet to come.
The bigger picture for stocks is to look for a low here at months end, a fw weeks of rally, and then the next leg down into the end of the first quarter.
As outlined in the December newsletter, I expect a sharp bond market fall to be induced by, but lag a dollar rally. That dollar rally is over two weeks old now, but is feeble at best. The timing of the next down-leg in stocks should be the time to enter a short bond position for a simultaneous stock/bond dive. Any sharp drop in bonds that resembles a kick-off move should be shorted. I’m watching the bonds closely here.
Gold, silver and crude oil are all in weak, daily up trends. Remember the earlier comments of the December newsletter to look for a metals’ top in early February. This weak rally is setting up that possibility nicely. Crude oil, whose weekly trend is up, looks to have a more sustainable upside potential.
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