A Recovery Rally Likely Ahead
Bob Hoye | Oct 26, 2014 01:57AM ET
Few Positive Signs in Markets - Three to four year quality bonds likely your best bet now.
Seasonal Pressure has Abated . . .for now
The seasonal pressures produced the anticipated decline in equities into mid-October, generating the most oversold readings in two years. The subsequent rally has been impressive, recovering half of the break in the Dow Industrials and Russell 2000 with the S&P recovering a Fibonacci 62%.
Having been the first drop into the seasonally weak period we should be on the lookout for an A-B-C style of recovery rally over three to four weeks into early November and then a test of the October 15th lows. The ‘A’ leg up should be close to completing now. Look for the ‘B’ leg down to give back 30% to 38% of the rally from October 15th September peaking action. The ‘C’ leg could be a test of the September peaking action.
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