Saturday, December 25, 2010

12-25 cycles and the week ahead

I told you last weekend "In total though the longer cycles are providing upside momentum (with the 1 year cycle dominating).

This is offsetting any dowside momentum from shorter swing cycles and giving us a sideways market."  Check, the market was sideways (S&P up less than 1% - 1246-1257).    Mid-week I told you "A pullback to the 1240 range over the next 2 days seems possible.  But with the longer cycles pushing higher I would say the possibility of this is no more than 50-50."  Well, we did not get any pullback worth talking about.  50-50 was about correct with a slight up close Wednesday and a mixed close  Thursday.   Not a perfect call, but not a bad call either.

So what lies ahead next week.  More of the same?   Let's take a look.   The 1 year cycle should top by early January.  Maybe as early as Dec 27 if you believe the Gann and Bradley turn dates.  The 20 week cycle is up into early February. The 41 month cycle topped Mid November and is down .  The 6 month cycle is also down,  It appears in total longer cycles should largely offset.  If the 1 year cycle tops next week maybe a slight down bias (but, I think that will happen in January).

See for yourself:
So, with the longer cycles in a standoff we turn to the shorter swing cycles,   It appears the 34td (trading days) cycle turned down last week.  The 45td cycle is down and shoul bottom by the end of the week.  The 22td cycle is also down next week.  So the sum of the shorter seing cycles appears to be down. 

Given this alignment of the shorter swing cycles and the longer cycles  we should have a decent chance of  a down week.  I would say probably 80-20 odds of some pullback between Christmas and New Year.   Maybe 1.5-2% pullback (15-20 points?).  One would expect some support around 1237 (the prior top in November).  And at the very least any upside looks very limited.

See for yourself:

Merry Christmas.  Ho Ho Ho

Update - 10-26:  China raises interest rates.  How will this affect our markets?  Could it be the straw that breaks the bull's back?

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