Over the past two months, models have been indicating the low for the 14-16 week cycle should arrive from late September to early October. The strong reversal on the 4th and today in global markets would correspond with that pattern.

Opposite correlated securities are also expressing stalling or weakness in their trading today. The VIX and the US dollar index both are showing signs of declining.

Bottom line: A one or two day movement does not make a new trend. However should equity markets continue to advance over the next day or two, then the probability increases that a short term low has been established. As stock markets trade on the regular 14-16 week cycle, the start of a new cycle would indicate more positive markets can be anticipated in October.

It is important to remember that the primary trend is still down. Bear market bounces last only 4-6 weeks on average. The next low anticipated in early January.

More market research will be in the upcoming November newsletter.

By Donald W. Dony, FCSI, MFTA
www.technicalspeculator.com

COPYRIGHT © 2011 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present. He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms. He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

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