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Market Rally Both Believable and Foreordained

I keep hearing terms like UFB! and WTF! from my fellow bears, as they express shock and awe about the persistence of the stock market rally. But not only should it not be shocking, it shouldn’t even be surprising. Cycle projections forecast it beginning in early December for the 10-12 month cycle and early January for other cycles. Fed deposits of cash into primary dealer trading accounts, which were foreordained and widely publicized made it happen. When the Fed announced QE2 in early November, this rally was a done deal. It is both believable and rational, and in fact, foreordained. To feel otherwise is to be in denial about what drives the market. Here’s what I wrote in the Professional Edition back at the beginning of the year.

The market burst through resistance, but did so without a significant increase in cycle breadth or momentum. So this looks like more of the same of what we’ve been seeing. The 6 month and 13 week cycle projections now point to 1317 and 1320 and the 10-12 month cycle projection range has widened to 1310-1360, with highs due later in the first quarter.

Here’s the entire January 3, 2011 report in pdf format.

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