The markets have done what they do best the last few days, frustrate the majority. Bearishness had risen dramatically heading into the February 5th low. The tide had turned in a hurry. But in the last two weeks the market has been resilient, rising and seemingly on its way to new highs. The bears have been running for cover, just as the bulls had been just 3 short weeks ago. Then today happened.

The stage is now set for a serious decline in stocks, and probably other asset classes as well. The only question is will it unfold that way. After today it looks more likely.

The cycles I follow call for a move to new lows (below the Feb lows) by the end of March. Then an important retest of the highs should occur. If that fails, then it really gets serious.

One thing that occurred to me recently is that 2010 COULD be a 4 year cycle low. You get there by simply counting 1990, 94, 98, 2002, 2006, 2010. etc. But sometimes cycles expand and contract. In fact Tim's work suggests the March 09 low was an extension of the 4 year cycle low due in 2006, which would make it the longest 4 year cycle on record. So is it possible to have another extreme low late in 2010, less than two years after the last 4 year low? I think it might be.

My rational is that it would make perfect sense to have the longest 4 year cycle on record followed by the shortest 4 year cycle on record, which is what we'd have if another low occurred this year. That would get the 4 year cycle count back on track. Could that be what the possible 3 of 3 is suggesting will unfold? It would take a seriously powerful, rapid decline to make that happen, but that's what a 3 of 3 would be, right?

Could it be that simple?  I don't know. I'm just saying.....maybe.

What I do know is that the market looks vulnerable tonight. So be on alert.