We are in the midst of the summer. The US market took a hit and then basically came back in a week. In a previous blog we said that a 7% decline from the high will be the bottom of the decline if we are right about 2011 looking like the summer of 2004. This is exactly what happened. Except the market sprung back a lot faster than in 2004.
What does the model say now? The model is not bullish on the US for the short-term. The long-term indicator is in the middle of bearishness and bullishness, but the short-term indicator is bearish. This means it is hard to determine where the US is going. Therefore, we recommend staying away from the US market for now.
The markets the model likes is:
India
Indonesia
Japan
Malaysia
Mexico
Looks like the Asian markets are the next trade. The model is not bullish yet on other Asian markets such as China, Korea, or Singapore. However, if the Asian trade is the next trade then these markets will start to follow suite.
Based on our analysis of previous periods with the same indicator levels, the US market will fall and rise until the end of September. At that point the US market will have a rally to the end of the year.
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