The irony is that we've already seen so many key warnings and support levels broken, the last few days of rally makes no difference to the bigger picture.
To close tonight, lets consider the Transports index.
Transports, monthly, 6yr
Summary
Even if you wish to dismiss the 'doomster' projection as nonsense - and I'm inclined to suggest you do not focus on that aspect of the chart, the key aspect is that the Tranny IS the historic leader, it has always been one of the key indexes to warn of major market declines.
In the scheme of things, the recent May candle doesn't look like much of a decline, and so far even June is only marginally lower. Yet we ARE putting in lower lows, and lower highs. The flat top WAS broken below, the big 5000 level WAS broken. How can people be so bullish about the rest of this year?
Targets for the Transports
-The 'doom' target is indeed around the 3500 level - which is indeed 30% lower - implying dow 10k, sp'1000 - something in that realm of price. I suppose that is possible this year.
-The lower channel line target - which is certainly reasonable to expect, is 4500 or so - that's 10% from current levels, and would imply sp'1225/00 in the coming 3-5 weeks. I suppose that might be where the Bernanke appears to do QE3, in which case lower bearish targets will be cancelled.
So, as I often say...keep your eye on the Transports, the old leader is still worthy of attention.
Goodnight from London.....the weekend is almost here!