Market likely to be range bounded before a "powerful?" tradable rally in the year end

The market is in bear market. The economy is in recession if not depression. The primary trend is down.

Everyone is looking for a year end rally. The question when we will get one is in everyone's mind. Bear market rally comes from all forms, some of the strong ones can produce powerful returns.



There are several positive factors in the making,

• The market is still quite oversold in the intermediate terms.
• New lows are not expanding, a positive divergence.
• Market enters the favorable seasonal period from Nov to May.
• The Banking Index is holding the low made in July and showing the relative strength to the market

There are some disturbing factors as well, two outstanding ones,

• There is no market leadership, other than a few medical stocks, it is a waste land.
• The 50MA is still quite far from the index indicating more sideway work needs to be done.

One recent bear market rally we can compare to is March of 2008. Compare to today, can you tell the difference?

I still believe the market will have a tradable rally before the year end, but for now. I think market will range bounded to early December of 2008.

For growth investors, your strategy continues to be sitting with large percentage of cash.