The November to Early January Market Cycle
The cycle was very bullish in its development, with a small dip at the end of an early A segment followed by rising prices right into the end of the period. Sometimes cycles during very bullish market periods show patterns of price movement that make it very difficult to determine the completions of cycles that become more readily discernible in indicators that track the momentum of the price advance.
For example, the RSI dipped a few days before the end of the cycle, failing to confirm new highs made in the Standard & Poor’s 500 Index at the start of 2004.
Cycles that end as strongly as the cycle from November to early January are usually followed by very strong market action at the start of the following cycle, which is what took place in this instance. The RSI indicator, incidentally, clearly indicated the A, B sequence of the November-January cycle, which was not as apparent in the price pattern.