VIEW THIS FOR WHAT IT IS

I think folks would do well to view the recent market action for what it really is. Nothing more than profit taking in an overbought market. There is no fundamental reason for the bear to come back yet. Until there is the stock market trend will remain up, interspersed with periods of profit taking.

I've been pointing out to subscribers for some time now the extremely stretched condition of this daily cycle. We got something very similar in `04 as the second leg of that bull topped. Fundamental conditions at the time where very similar to now. A liquidity driven rally and the beginnings of slightly better economic conditions.

I really don't think the correction separating the second leg of the bull from the third leg is going to last all the way into Aug. like it did in `04. I also doubt we've put in the final top for the second leg yet either. Let's jsut say I won't be surprised if we bottom quickly and then move back up to higher highs before beginning the real correction. I expect that isn't going to arrive until at least March and maybe even as late as May.

Exceptionally long cycles like this tend to bottom fairly quickly as more and more people get more and more nervous as the cycle stretches. So when the decline does come for real everyone tends to hit the sell button quickly, which makes for sharp declines but it also means we can run out of sellers quickly.

That's what I expect to happen here. Today was probably a 90% down volume day. Those tend to occur at or very close to cycle bottoms. So while I think we probably aren't at the bottom just yet, we should be getting close.