Summary: Continue to maintain a LONG/HOLD position.
1/28/2014 – The market rebounded nicely today with the Dow Jones being up +91 points or (+0.57%). Is this the bottom of the first or “initial sell off”? It is hard to say. While it looks promising the short term picture remains bearish.
If you look at the five day chart above you will note two gaping holes on Jan 23rd and 24th. As I have mentioned many times before, the stock market tends to close such gaps before any sustained bear or bull moves can take place. Since our work indicates that the Bull market from 2009 bottom has topped out on December 31st, 2013, the market must jump back into that territory and close the gap before a sustained bear market move can take place. As such and based on my calculations, a rally from this point on into the 16,400 on the DOW would make perfect sense.
With that said, there is nothing left for us to do except sit on our hands and wait for some sort of a confirmation. I believe we are still weeks away from such an event. It is too early to go short and it is prudent to remain long in case the analysis above is incorrect.
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