4/26 Daily Commentary

The stock market is completing 4th wave for Nasdaq Composite from last Tuesday's low.  I expect stiff resistance in the 2540-2550 area, with the close today 2523.  I expect more rally into the 4/29 close as indicated by I1.  (See Weekly Commentary).

Here is the SPY count:

Whatever the count, the stock market should hold up into 4/29 late afternoon.
While waiting for 4/29 I want to unveil a data series that is as important as the I1 because it measures sentiment in a market equal in sensitivity to the stock market and equally as important to the world economy.  The U.S. bond market.  The data series is almost as accurate as the I1 for the stock market and has been very profitable for me in the past.
In addition to potential bond trades, analysis of the bond market provides the counterpoint to stock market analysis, as these markets usually move conversely.  Fear buoys the bond market and suppresses the stock market.  Greed flows into risk assets including the stock market and out of the bond market.
The history and trading rules are in a new page, titled Bond Market US1 Trading Rules.  Using the rule set within this page I interpret the bond market going forward:

The bond market is in the incipient stages of an extended rally, with US1 peaking above +2 in mid-November.  The 2010 forecast for the stock market using I1 bottoms 11/15, so these markets confirm the probable bottom date.  The bond market US1 is indicating a shift in sentiment away from greed, is ready to rally now,  and will reinforce the stock market decline.  It is incredible that the bond market could rally from here, given the government profligacy.  The only way I can see that happening is with a stock market collapse, which would make investors desparate enough to seek safety in government debt, even if that government were managed by unscrupulous politicians (no, not all politicians are unscrupulous).
As far as Elliott wave goes the bond market has completed an ABC downward correction from the 12/08 high. Remember when the world got all scared and bonds spiked?
 http://finance.yahoo.com/echarts?s=%5ETYX
So, fundamentals aside, bonds will rally.  Will go long bonds on 4/29.  Expect to catch jeering comments on that.  Mid-May will be a short silver trade.  Jeers will come with that, too.  Yes, America is going bankrupt but the process will take time,  plenty of time for solid moves in the counter-intuitive direction.