Through the end of 2009 and the first quarter of 2010, stocks are bound to stick to a narrow range, as investors hold onto gains off March lows and seek the next catalyst, said Jamie Cox, managing partner at Harris Financial Group. "The broad averages are probably going to go sideways and for a while," Cox said.
Will he be right? I suppose he might. However whats interesting is that no where in the stories is mentioned that stocks might actually finally have that correction coming and perhaps a deep one. But again, after of sideways action, the thrust of the media story is that stocks will now go sideways.
They have been already going sideways (and not mentioning this fact to begin with) and now that your comfortable with the trend you say they will go sideways some more without ever realizing that the sideways movement is coming to a likely end.
So whats my point? The point is that a theme is developing that the end through 2009 will be relatively"safe". Home free. And perhaps it will be. But usually the market doesn't give us what we want.
I have also encountered this firsthand with people I know. Some keep harping on a "Christmas rally" without being able to define what that is and when it is exactly supposed to take place, how stocks are supposed to behave and how much is to be gained. I guess any day that stocks go up and its either a) in the month of December, or b) somewhere in the holiday season through New Year, defines a Christmas rally.
Of course its not low volume time just yet. That doesn't occur for a couple of more weeks at least. And it will take higher volume levels to break through certain key resistance or support zones.
At any rate, we are looking for a 5 wave move down at least at Minuette degree to form a Minute [i] before we can really start to put together the makings of a trend change. But no one wants to miss that first drop down because it can be painful if your long and you may chase if your want to short. A Minute [i] wave is expected to lop off at least 5-6% off the market.
But back to the main story. Will stocks continue to go sideways? I think likely not. Will they actually break upwards? Perhaps, after all we have a nice count that needs "filling out" to the upside to be a very satisfying waveform. But the minimums have been met for that Minor C up.