Over the past week or so, markets have managed to stay above critical levels, thus, preventing an immediate decline. However, over the last week the market structure has been choppy at best, with several up/down gyrations. This kind of behavior is a hallmark of market correction, rather than a new rally phase.
Yesterday, I was surprised by the Put/Call ratio activity. Although market's rise was neither sharp nor significant, the Put/Call ratio collapsed. This kind of activity does not bode well for the market's immediate future. Lower Put/Call ratio means complacency and complacency leads to market declines. After witnessing this curious market action, I decided to re-run the IPM Turn Model to gather some insight about the market direction.
After re-running the Inflection Point Model, following outcome was achieved.
According to this analysis the next IPM turn date is scheduled for May 3, 2012 (+/- 4 days, Higher Probability: -2/+4 days).
Over the past few weeks, I have tried to optimize the IPM turn model to define whether the market will Top or Bottom at the next turn date. Per analysis, next IPM turn date should be a market bottom. Please note that this bottom could result in a brief rally, followed by a new low in May 2012.
This market potential is possible when market pattern is taken into account. If this pattern is confirmed, we will see further selling. Confirmation of this pattern will coincide with confirmation of the 8/4 test in the major indices. A break below 1360 and 12800 will confirm this pattern in SP500 and DJIA, respectively.
Please note that since, we only have 6-7 days left in the IPM turn date, markets should start declining very soon i.e. Today/Tomorrow!!