Well, I certainly did expect a move back to 1,820, under both the bullish and bearish case.  I just didn’t expect it to occur over just 5 short sessions!  This strength in equities is truly amazing; there is just no other way to describe how the markets were able to bounce back so strongly.  Where this Cycle stands today, no one should be remotely considering betting against this trend.  If you don’t believe or buy this rally, then step aside. 

The 5 Day move off the last Cycle Low was one of the most powerful of this cyclical bull market.  Yet again, buying the dip is proving to be successful.  I don’t know exactly what it is however, but the tape feel almost contrived and suspect to me.  I can’t put my finger on it exactly, but I feel that the rapid decline into a Cycle Low was just too quick and relatively shallow to support this type of reversal. 

But in the end, benefit of any doubt must be given to the bulls.  We’ve seen the equity markets rally to new all-time highs many times from a very similar short and shallow retracement.  Although I would not be overly surprised to see this rally fail and turn back to break the recent lows, I can’t endorse that here as a viable scenario.  If we follow the pattern of Cycles this past 2 years, then the only probabilistic conclusion is that equities will find new all-time highs in the very near future.

Certainly the “smart-money”, as defined and tracked on sentimetrader.com agree.  They appear to be buying this as a likely new Investor Cycle.  They typically do not become this bullish (50%) unless we’ve had enough of a capitulation in the market.  Because the recent lows fall very deep in the Investor Cycle timing band, the expectation of a new IC is very real.    

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