EUPHORIA STAGE

I think we are on the verge of entering the euphoria stage of this cyclical bull market.  The euphoria phase is where the rate of change starts to accelerate as traders become convinced that the economy is booming, and will continue to boom into the foreseeable future (the last bull market), or in this case that QE3 is a magic elixir with no unintended consequences.During this final phase the character of the intermediate cycles should change and instead of a modest move above the prior intermediate top we will see a strong acceleration and a significant and sustained breakout above the September high of 1475. All of the traders that have convinced themselves that QE is having less and less effect are about to be caught off guard as we move into the euphoria phase of the bull market. You can see in the chart below in 2006/07 the intermediate cycle accelerated rapidly past...