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New Bull Market Is, Well, Bull


Name of the game isn't to buy the dips; it's to sell the news.


Editor's Note: This is a free edition of Jeff Cooper's Daily Market Report. To receive a 14-day free trial of Jeff's insights twice daily, click here.

Four seasons in one day
Lying in the depths of your imagination
Worlds above and worlds below
The sun shines on the black clouds hanging over the domain

It doesn't pay to make predictions
Sleeping on an unmade bed
Finding out wherever there is comfort there is pain
Only one step away
Like four seasons in one day.
-Four Seasons In One Day ( Crowded House)

"The connection between cause and effect turns out to be only statistically valid and only relatively true… I define synchronicity as a psychically conditioned relativity of time and space."
-CG Jung

On Monday, the popular averages entered the window where an interim top was forecast. The week opened with a 90% down day and the worst decline since the early March low. Significantly, in the process, the Weekly Swing Chart turned down for the first time since turning up on the week ending March 13.

This price action is the first step in corroborating the forecast. If the interim trend is turning down, the normal expectation would next be for the market to roll over on a turn up of the Daily Swing Chart, the next lower time frame.

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That occurred on Wednesday, as the S&P traded above Tuesday's high but rolled over in the last half hour to close below the prior sessions close. After being up nearly 12 points, the S&P glass proved to be half full, it drained by more than 6 points at the bell.

The S&P seems to have traced out the obligatory snapback in keeping with the Principle of Reflexivity after turning the weekly chart down on Monday. The index rebounded on the first tag of its 20 day moving average on Tuesday morning with the workhorses of the market, Apple (AAPL), Research in Motion (RIMM), Google (GOOG), Baidu (BIDU), to mention a few, getting spurred in the ribs from the opening bell.

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However, an extension of Wednesday's rollover and a second break of the 20 dma average would give a "Get out of Dodge" sell signal. We could see another sharp squeeze at any time, as AAPL earnings affect the tape, but I think the long side is getting more dangerous here.

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No positions in stocks mentioned.

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