Tuesday, April 24, 2007

 

Stocks could be set for a huge rally

My last trade was a short stock position which was stopped out at 12,670, Dow futures. Right now I am looking at the Dow, and stocks in general, and we have set up for a potentially huge rally which could take us between 13,500 to 14,000 by June. (Remember, predicting time is the weakness in Elliott Wave forecasting.) I will know I am absolutely wrong if the Dow hits 12,428 but we should get no where near that area. A correction of maybe 200 points from current levels (12,950) is possible.

Given my certainty I wish I could say that there is a great trade here. Maybe a long call option which would limit the amount you could lose without a stop. Also, I do expect this rally to be rather fast. We won't be sitting at 13,000 for several months. If we do see a correction in this uptrend I will give more thought to a trade.

Given how people look to round numbers like 13,000 as major obstacles I think we should cross over that barrier and fly higher. Now I am getting beyond the scope of the theory. Just remember the waves have lined up to signal a continuation of the rally over the next couple of months, at least.

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