"I have not failed. I've just found 10,000 ways that won't work.”

Thomas A. Edison

Despite an August we'd all like to forget, the market continues to do what it is supposed to at this point in the second leg of a bull market. Investors are more bearish than they were at the low on July 1st and we never went below it. That means anticipation of a market drop is the consensus and the pendulum of emotion has swung far over to the fear side. This is precisely what needs to happen before a rally of the magnitude I think is coming, occurs.

2010 is an important year as far as market cycles go. For some reason the market forms an important low every 4 years with a few exceptions. But perhaps it is more accurate to say that the market starts a new uptrend, a bull market leg most of the time, every 4 years. Most of the time the change of direction is dramatic and sometimes it occurs as a result of some world event. This year's "flash crash" may have been a sign that we have experienced the 4 year low and are beginning our new bull market leg. Some indicators are affirming this view so as this rally proceeds we will be looking for confirmation from additional sources.

I hope everyone has a happy, safe Labor Day weekend.

Gary

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