Stock rally caution

Back in early March we called for a big stock market rally of about 20%. From the low point on March 6th of 666 on the S&P500 to yesterdays high of 800, we have seen a 20.1% rally. Given the dramatically oversold nature of stocks at the time it wasn't that hard to predict the rally. However what happens next is far more difficult.

Our original forecast was for a 20%+ rally with a big sell off from mid to late April with new lows in October/November. We stick by this forecast but caution you that the duration of the rally may not last until April and a sharp correction or even crash may be imminent.

Lets look at the charts to understand why:

S&P500 long term back to 1982 with Fibonacci levels



As you can see todays close of 766 is right on the 2002/2003 double bottom low. If it does not hold this level we will see a break of the recent 666 low. The fibonacci level of 638 is the next obvious support but if this breaks there is no major support until 444 a whopping 42% under todays close. Again I state that my forecast is not 444 but you should be aware that it is a possibility in a panic sell off.