Even though it's very late here, I feel way, way too guilty about leaving a lame-o post as my final post of the day. I really did put together a nice video, but it's lost to the dustbin of history.

I will share with you, then, my rationale for my "bold prediction" last week. Let's start with a snapshot of some market action from 1938. You should click on this image to get a better view.

I have hand-written a series of letters on this graph. The letters don't have any special meaning; they just provide a means of sequencing important highs and lows.

Now let's take a look at the present day, with the graph terminating on September 11, when I did this Starbucks Study:

What I've been focused on is the move from "M" to "N". I didn't know when "M" would be complete, but I will say this: in percentage terms, today marks precisely the same kind of move in 1938 of "L" through "M". If this is the case, the move to "N" would actually end at about 975, as opposed to the 950 I mentioned last week. But, hell, that's still nearly 100 points, and I'd gladly take it.

Some folks – mole in particular – like to utter the phrase, "history doesn't repeat; it rhymes." I'm not sure precisely how I'm supposed to apply that to real life, but – meh – I'm looking for things to repeat.

It is generally true that prices climb higher at a far slower rate than they drop. This rally, however, has been a remarkable exception. The push higher has been explosive, and it has pushed higher with just about the same timetable and force as the drop itself.

The question, of course, is: when (if ever) will it end?

There are as many opinions as there are traders, but a few general camps would be, using the example of the Russell 2000 above:

1. It has another 10% to go, and it will happen quickly. That would be painful for the bears, but I would hasten to point out that, at that level, the Russell would have completely retraced to the neckline of a head and shoulders pattern spanning three years whose beauty would make bears (if there are any left by then) weep tears of joy.
2. It's done climbing and will start falling. This has been uttered so many times by so many parties (including, I admit, a few times by me) that it's not even worth considering anymore. The entire, "OK, now………….errr………OK, NOW!………..oh, wait…………….errr, NOW!" gets really, really old.
3. We're in a major new bull market and it's simply going to keep pushing its way through to progressively higher prices.

For the bears out there who would like some encouraging news, the semiconductor index – which is a helpful bellweather – is looking like it is approaching a huge area of resistance. This is why I bought SSG yesterday.

I continue to get emails from people puzzling as to why my disposition toward the market is not more dramatic (e.g. end of the world, Dow heading to 400, complete apocalypse). My new double entendre with respect to my view is going to be: "What it lacks in violence, it makes up for in length."

There's nothing tame about a grind-it-out bear market that lasts for years. The last six months have been a gift straight from heaven for the bulls, but I don't think they should get used to it. I don't think an honest-to-God bull market is going to return until about 2014, plus or minus a year. Here's a very simple chart I put together this morning; the intersection of those tinted zones is my sweet spot for when this thing finally turns around.

As for the short term – – as I said, I think we're going to see 950, plus or minus a few points, within weeks. I also don't think we're going to exceed recent highs by more than a few points, if at all.

The bears had an amazing party late 2008/early 2009. The bulls had an amazing party most of 2009. The real work – – no "party" for either side – – begins soon.

Molecool, Royal With Cheese, and I have all noticed an "eerie calm" about our demeanor and disposition toward the market lately. We all think the market is utterly hosed. And we're all kind of amused at how bullish everyone – and I mean everyone – has become. And I'm looking right at you, Annamall! Seriously, the three aforementioned chaps are just about the only bloggy-bears left.

I spent the evening going through my two thick white binders – Tim's Trading Tome and Tim's Trading Tome Two - whose movie rights I still own – and it really helped get my head screwed on straight again. One of the favorite charts I have in there is something molecool put together and posted on his own blog a couple of weeks back - here it is:

A thing of beauty! I love how he's blended his EW projections with the cold reality of mortgage resets. Those damned German engineers are so clever.

Whether or not the market has any more fumes left to drive this rally doesn't matter much to the three of us (if I may be so bold as to speak for my cohorts). The idea that "good ol' American know-how" is going to get us out of this mess (and it is a mess, no matter what the crooks in Washington say to you) is complete hokum. We haven't paid for our sins. And, sooner or later, nature will force things into balance.

I intend to make a tremendous amount of money in the next few years, and I think we're going to look back at this summer one day and just roll our eyes. Remember NCFOM: You can't stop what's coming. It ain't all waitin' on you. That's vanity.

Disqus Update! I've been in touch with Daniel tonight, and they are upgrading their servers – – so expect flakiness, but it's all for the greater good. See their updates here.

I found this graph, posted by ZigZag over on Mole's site, to be intriguing.

Oh, and speaking of Mole, here's the picture he keeps bugging me to post.