Midweek comments

The S&P 500 and number of other indexes made new all time highs yesterday, but the Nasdaq is still lagging. I think we have come to a very interesting point in the market for a number of reasons:
* an ecplise red period is starting today, which increases the risk for a downturn in the next couple of weeks.
* the Dow is once again testing the 16500 level, which we predicted to become a major resistance level last summer. See: Why Dow 16000 will be sold for the calculations that pointed to 16500 as a major barrier. It will take a clear break above 17000 to consider this resistance zone broken.
* our forecasts for 2014 also pointed to an April peak, see: Forecast for 2014. The four pillars finance scenario has been correct so far this year, will we now also get the subsequent summer decline?
* we are a few weeks before the so-called “grand cross” becomes exact, which is the average point where weakness starts to set in. See: Should investors worry about the grand cross in April?
* monthly momentum (MoM) has just turned down for a lot of important stock markets, as reported in my latest post. Changes in the direction of monthly MoM are rather rare, and they often indicate the end of a long term trend.

So, a lot of indications are converging right now, all pointing to a correction to start soon. There will be another small window for possible higher peaks towards the end of April, but after that I think the market will trade with a sideways to down bias for the next 6 months. This is not a reason for instant panic, but buying some protection for your portfolio is probably a good idea at this point.

Good luck,
Danny