Weak prospects

''After contracting sharply over the past year, economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good,'' B. Bernanke, 21 August 2009;

How would he know?

“Our forecast is for moderate but positive growth going into next year. We think that by the spring, early next year, that as these credit problems resolve and, as we hope, the housing market begins to find a bottom, that the broader resiliency of the economy, which we are seeing in other areas outside of housing, will take control and will help the economy recover to a more reasonable growth pace.”
B. Bernanke, 8 November 2007.

The KBW Banking index is in its very well signalled fith wave, shown here on an hourly chart.
I expect this wave to finish later this week or early next week. I will use this index as my guide to when the advance might be over for broader averages.

The internal structure of EU indices appears to be in minor fourth wave consolidations before more upside. I expect the move higher that started on Wednesday last week to end at levels around 3% higher.

Looking out slightly further, I believe we are establishing a top of epic proportions.