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Will Swine Flu End the Rally?


Or is the market set for another leg up into summer?

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.

The news breaks with the cycles, and not the other way around. News of the outbreak of the swine flu is sending shivers across global markets and dampening the hope-filled rally.

While an idealized pattern of a marginal new high at/near Monday's open would have satisfied a possible Broadening Top or Megaphone pattern in the S&P, the rally was long in the tooth: as you know bear market rallies seldom if ever last more than 6 to 7 weeks and if they stretch further it is usually sideways action.

The Weekly Swing Chart turned down last week in the S&P and trade above the high of a week ago Friday would have tuned the weekly chart back up while tracing out a Broadening Top.

It is possible the S&P could decline to 840/850 once again and hold into Tuesday and move up once more into month end for a marginal new swing pattern high, but the market is risky here and trade below 856 suggests a move down toward 800 as indicated last week.

Rarely if ever do bear market rallies last for more than 7 weeks. That was the case with the important January high this year, while the May 2008 high was also approximately 7 weeks.
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