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Morning everybody! For edification purposes only...this little item is going into my longterm chart analysis folder to help me avoid being fooled whenever the Golden Cross rolls around. By itself it means very little, just as I suspected. It really does pay to cross-check other signals.

From John Hussman:

Similarly, we are skeptical about things that cross our desks urging us to forget the economy's debt fundamentals and break into a chorus of Zippidee-Doo-Dah. Last week, for example, I was treated to a report on the so-called “Golden Cross” – the event where the 50-day moving average of the S&P 500 crosses above the 200-day moving average. Next to a carefully compiled set of dates were the purported returns of the S&P 500 over the following 1, 3, and 12 months. As one moves down the report, the analyst either figured that investors would no longer pay attention or forgot how to operate a calculator, so one-year gains of 100%, 200% and more were piled into the average (the figures were about 10 times the true returns). Suffice it to say that the true history of the Golden Cross is bronze at best, with actual 1, 3 and 12 month total returns in the S&P 500 (since 1940) coming in at 1%, 3% and 14% on average. Even those figures, however, benefit from three particular instances where the S&P 500 gained over 40% over the following year – those instances were 1942, 1953, and 1982 – each which began at multiples of just 7-8 times normalized earnings (not the current multiple of nearly double that). Excluding those three instances, the subsequent returns from the Golden Cross are no better than throwing dice.
In short, beware of analysts bearing indicators that all is suddenly well, and check their facts.
Click to expand...

http://www.hussman.net/wmc/wmc090629.htm
 
....one of the patterns that has been highlighted quite often recently in many wrap-ups is a possible Head & Shoulder (H&S) pattern. Why do people see H&S patterns all the time? It has the typical characteristics of a Dow-Theory reversal when higher highs (lower lows) are interrupted by lower highs (higher lows). The only problem here is that a H&S pattern only becomes an H&S pattern when the neckline is broken and not before. Once the neckline is broken a price target can be calculated taking the distance from the top (bottom) of the market to the neckline and subtracted (added) from it. As a side note, a complex H&S pattern has multiple shoulders.

We don’t have enough of a corrective pattern yet to decide if this is a zigzag, flat, triangle, or combination of any of those three, so there’s no need to go over those types of corrections. The only thing I can be sure of is that we are now in a sideways trending market, working off a lot of the overbought readings this powerful rally has created. We don’t have the conviction from the market based on technicals until the previous support and neckline is broken to the downside or a new higher high is created. Quite simply, this market isn’t trending. We have the first sign that it “could” be trending with failure swing, but this hasn’t been confirmed by a lower low (which would also confirm a H&S pattern).
Click to expand...

The chart he's looking at wouldn't post with the text, so I'll just note he drew the "neckline at about 880, which came close today but still hasn't broken. I'm still waiting. Sigh. Patience is a virtue, right? :suspicious:

http://www.financialsense.com/Market/wrapup.htm
 
To follow are some charts from previous recessions, showing mostly the recovery stage.
Just interesting to look at. Intial recovery was usually pretty strong off
of bottom. Those on the sidelines in some recession periods
had a hard time waiting for a good pull back in the first few months of the bounce.

Recession Dec 1969-Nov 1970

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I really like those graphs from 1982 and 2003 - they give me confidence that this current bull run will exceed their gains by a wide margin. I'm bullish on America.
 
So how far could the market go if above test fails?
The chart kind of looks like two big bubbles...Dot Com....and Housing combined with easy money from low interest rates.
As long as the Fed keeps the printing press running the market should continue higher. But if you look at the chart below
in the next frame below ATCJeff, the market will have to make some adjustments when interest rates start up again.

SPX

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It's amazing that I heard a talking head calling 1200 this fall. That looks just about the top of the downward channel.
 
The big question is ' How soon will the Fed have to start tighting up rates
to clean up all the excess bills out there? '....Possible higher taxes and higher interest rates will put a pretty good load on the stockmarket Bulls' back down the road.

Dollar index

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