Will history repeat itself?
The market has continued to hold up over the last week. From the below chart I fully expect to see the market pull back, my two targets are 3500 or 3350. However if the pull back does not happen soon there is a chance that the market will continue along in this channel before making a stronger move up.
The coming week will give us another piece of the puzzle.
There are however a couple of key indicators which are telling us that the economic crisis is not over yet. First the TED Spread, is current double the long term average, US corporate risk spread is three times the average and the US home debt growth is negative 4 percent. What this indicates is that the economy is not on the mend just yet. As these indicators start to move close to their long term average this will be a good sign that the economy is on the mend.
For now I am still expecting a market pull back.