With the month of February in the books, and sticking to our KISS-principle, let’s take a look at the monthly candle chart. After months of consolidation at the 2007-highs (lower dotted line) this month shows a bullish engulfing candle that held at that level (!) and which breaks through previous S/R lines (upper two dotted lines). That’s bullish consolidation followed by a break out. This setup appears similar to the those made during summer of 2010 and fall 2011 (solid blue lines). Note that in those two instances the month directly following were red, but with solid gains after that in the ensuing months. Keeping it closer to home, this suggest that March will likely be a whipsaw month with likely wave 1 and 2 finishing (see here for a detailed OEW count), before the 3rd wave takes hold.
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