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US Markets
From previous weeks: In mid-January the
rising wedge for the Dow broke out. According to Edwards and Magee breakout
from the rising wedge is evidence of the continuation of the primary bear
trend. If this is the case, the bear market of the last nine months was
merely a medium bull in a long term bear market, the latter of which has
now resumed. Target for the wedge, according to Edwards and Magee, is usually
the base of the wedge, which would be around 6,500. This seems a little
extreme. Earnings have been quite positive and all indications are that
the global economy is now out of its recession. Why should the market retrace
to its previous low? Perhaps we can escape the dire consequences of a rising
wedge. The second chart shows such a scenario.
Charts current to 5th March, except where otherwise indicated
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Resistance at the current level in pink and orange.S&P weekly showing the wedge on an arithmetic scale chart. I quote from Edwards and Magee, again, "A rising wedge on an arithmetically scaled weekly chart is almost invariably a Bear Market phenomenon." According to this claim we should at least acknowledge that there is a reasonable probability that the bear market trend of last year is continuing. 
As the index approaches the previous recent high we now have the danger of a double top, as shown in green.
The Dow in bull trend. 10,100 is the important support. 
Now consider the double top in green. 
Theory: Breakout from the wedge is clear. According to theory, target of the wedge is the base - or 6,500. Let us refer to Edwards and Magee on the subject of wedges. I shall summarize in a few points:
1. The rising wedge indicates a "gradual petering out of investment interest. Prices advance but each new wave is feebler than the last". This phenomenon is evidenced in the present wedge by falling volume throughout the pattern.
2. "Once prices break out downside they usually waste little time declining in earnest". The dramatic two day fall on Thursday and Friday, erasing two or three months of gain, does tend to support this observation.
3. The rising wedge is a "characteristic pattern for bear market rallies." It may be taken as evidence that "the Primary trend is still down." This is the important issue: was the bull market of the last nine months the start of a primary bull market or is it merely a medium term bull trend in a long term bear? I would like to see the support at 10,000 break, in the shorter term chart above, before concluding that a bear trend has commenced.The two possible paths: a plunge in red and a more leisurely path in green - both just guesses. The important issue is the target. 9,000 would be a conservative target.
A characterization of the Dow without the wedge shows support in pink and a possible new channel in grey.
Now beware a double top. 
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PE chart current to 26th February. 
PE of 20 is approaching resistance.
P/Es are based on average inflation-adjusted earnings from the previous 10 years (P/E10). source: http://www.multpl.com
Read more about this concept at: http://thesmarterwallet.com/2009/price-earnings-ratio-pe-ratio/New highs continue to rise. This is more bullish than bearish. 
Both 10 and 30 year topping scenarios. 
New high in the industrial sector is bullish. 
New high in the staples sector is bullish. 
New high in the discretionary sector is bullish. 
A persuasive double bottom with pullback and turn. Volume is not decisive, but it is sufficient to support the target. At the least I would expect a rally to double resistance 46. 
Marginal breakout with good volume. 
Charts below current to 8th January. 
Long term log chart with supports and resistances: possible channel in orange, regression line in blue.Long term log chart. Channel in orange is clear. 
Nasdaq 19 year chart with regression line (black) and five year extrapolation. 
Resistance in orange tested for the 30 year bond. 
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