A Positive Stock Market Cycle Is Slowly Coming To an End

Market Tops take time. From 2006 until 2008, it took almost 3 years to build a top in the Equity Market. I do expect a kind of repeat, starting in the middle of this year. Equities could remain on positive ground until Mai, but working on a distribution pattern as in 2007. None of the problems we have in today's world have been solved. Politicians keep on lying to the public, in order to get reelected. Central Banks get more and more involved with politics. This is fatal. Those Central Banks will lose the fight against deflation. The big deflationary threats will come from a housing crash in China, an shrinking economy in Japan or a strong fall in commodity prices coupled with a rising US Dollar. In my view, we are once again heading for the perfect storm. When politicians will see this, they will go to war. As in 2003, when the US Congress "found out" that there are weapons of mass destruction in Iraq. We have to be very careful with equity investments going forward. This economic recovery is to weak to be self sustaining, in Europe, as well as in the US. As long as the S&P 500 trades above 1270, we still have the power to rebound, but a break of 1290 would erase the chances of an inverted head and shoulder pattern in the S&P500.

The Dow Jones Industrial traded sideways for 2 years before it broke down.

The NYSE A/D line is still a positive factor for the market, but we have to hold the previous low during this correction
SPY 60': closed the gap, but the new low is a small sell signal. 129.56 has become a important support
QQQ daily time frame: Market has to avoid this double top, 53.85 has to hold

QQQ 60' time frame: A small sell signal in place, short term lower prices in the cards
Russell 2000: First we had a break out, now looks like a fake out, 802 is support
Eurostoxx50: Still in an uptrend, but no conviction to go long here yet. DAX: Has more downside potential from here: 6940 gap support, 6850 strong support
SMI: Weighted down by "heavy-weighted" dividend payments and a lagging banking sector. GOOG: After a break-out, a break down.... has to stabilize around 535, not a buy yet
SYST: Break out after bid talks. As long as the stock trades above 146.5, its a buy
EURCHF: sideways, but spectacular :-)

EURUSD: Short position stopped out @ 139.4, wait for another shorting possibility
DXY: A re break of 75.69 would start a bottom building phase. Expect a cycle low mid-year.
Corn: Holding above break out levels, but could start to trade in sync with crude.
Wheat: Still in a trading range

Gold: Broke out, thanks to the help from Central Banks. Uncharted territory
Crude: I expect a top in the coming weeks.