Based on the IPM turn point analysis, market could continue to rise till the end of this month. This observation takes on even more importance when viewed in context with the broader over-bought condition, decreasing market breadth and investor optimism. This kind of sentiment backdrop typically foreshadows price declines. Although the upcoming decline will most probably not result in a new bear market (at least not right away), it could present a good buying opportunity.
After re-running the Inflection Point Model over the weekend, following outcome was achieved.
According to this analysis the next IPM turn date is scheduled for March 1, 2012. This turn date coincides with a momentum based market timing indicator turn date. Therefore, we have more confidence in this turn date.
Since many investors might have stops near the 2011 highs, markets could rally during the next week as their stops are hit. This rally would result in a breakout, attracting more people back into the market, just in time for a major pull-back in March (per IPM turn date).
In the long-term (4-8 months) it seems like DJIA could rise to a new all-time high (~15000) before starting the next down leg. The best way to strategically play this kind of rally would be to wait for the March pull-back (if not already in the market), and then ride the market till the next 8/4 test to the downside has been completed.