Overly bearish sentiment has put us temporarily in the bulls’ camp, but we part company with the those who evidently are gearing for a powerful rally that lasts into summer or longer.  You can’t blame stock brokers, and analysts and CNBC shills for trying to spin things that way, since they can point to Tuesday’s monster rally in the Dow as evidence that the worst is behind us. They may be right, but so might people who believe in alien abductions, Tinkerbell, and OJ’s search for the real killers. Frankly, we’ve always thought the stock market’s vaunted prescience was over-rated and that nascent bull markets do not so much predict economic recoveries as engender them by turning psychology bullish at cyclically ordained intervals.

(Click on chart to enlarge)

But if a new bull market has indeed begun, it has gotten off to a weak start. Notice in the chart above that the 400-point rally earlier this week, powerful as it may have seemed, did not surpass even a single important prior peak on the hourly chart. Although that modest feat would have required only a further 46 points’ worth of jubilation, in our Hidden Pivot playbook book a miss is as good as a mile. In this case the shortfall was more than slight, however, since we require rallies to pass not one, but two prior peaks to create the kind of impulse legs that typically precede extended bull moves. It would have taken 92 points more upside to achieve that on Tuesday, but the fact that not even one important high was surpassed is reason enough to infer that this bull lacks real guts. That said, in the coming weeks the broad averages will need to act at least moderately buoyant to turn sentiment back to bullish. We’ll be watching this indicator closely, since we don’t think it will take much of a shift to set up the next killer bear wave.

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April Seminar at Night

There’s good news if you’ve wanted to take the Hidden Pivot course but have been unable to attend on weekend mornings.  In mid-April, I’ll be conducting the six-hour class over two consecutive evenings – Wednesday and Thursday, April 16-17, from 6 p.m. to 9 p.m. MDT.  Click here, and then on the “Upcoming” tab to register; or here if you would like more information as well as a detailed description of the Hidden Pivot Method and a free Hidden Pivot calculator.