Executive summary

Explanation

During last two months practically all forecasting models indicate the downward market correction while the stock market ignores all these forecasts and goes up. Here are examples of the forecast:

However, I feel myself uncomfortable with these forecasts. Why?

The reason is the reaction effect. All these models are based on cycles (whatever - math or astro based cycles), while during the last seven months we have up trend movement (with small correction in June).  Any cycle based model will show downtrend movement after this long enough up trend period - this is math�s necessity.

I see the only way to overcome this situation: it is avoid to use cycle based models right now. As J. Ehlers would say - the stock market now is not in a cyclic mode, now we are in a trend mode.


We may deal with it this way: the Similarity module finds the most similar years when the price followed the same pattern in March - October as in the year 2009.

Here are these years - 1989, 1980, 1995, 2003, and 1993:

This is the averaged line:

For Timing Solution users:

In Similarity module you should set this option to find the most similar years: 

More info about "reaction effect" see here http://www.timingsolution.com/TS/Study/Reaction/reaction.htm