Monday, January 17, 2011

01-15-11 The week ahead

We set new highs in the week just past.  Which is not surprising - we anticipated that may happen.  On Tue/Wed we may again set new highs as we closed within a couple of points of highs for the week on Friday.  We may even break 1300 as everyone seems to expect.  I hate it when everyone seems to expect the same thing - so I will be conservative and say we go above 1295 and fail to surpass 1300 just to be a contrarian.  I hope you have tightened up you stop orders as I have been recommending the past couple of weeks.

I was not certain of my placement of the 20 week cycle, so I did some research and believe I did have that cycle incorrectly placed.  Looking back 2-3 years it appears that the 20 week cycle ( verified from other sources as well) should be like this:

I have also charted longer cycles (up to 41 months) to give you a sense of the longer term environment.  The 41 month cycle is down, the 2 year cycle is down, the 1 year cycle is ready to turn down and so is the 20 week cycle.  I believe this sets up a negative cyclic environment for the market for the final week of January and all of February.  This down trend may well extend to late March....  Here is the chart:

Finally, looking at the shorter cycles - the 22td (trading days) cycle topped and is turning down.  The 34td cycle is up.  These 2 cycles offset next week, so we are looking to see what the 1 year and 20 week cycles do.  Here is the chart:

Next week could be very interesting if as expected we get the 1 year and 20 week cycles turning.  Most likely scenario is up 1-2 days to start the week and then selling in the latter part of the week.

GL traders.  Keep those stops tight and watch for fireworks next week. One or two pieces of bad news could create the biggest sell down we have seen for a while given the cyclic environment.

Update 1/17 - 1:29 pm EST

Is the Jobs news the catalyst to cause the market to turn?  AAPL is about 20% of the NAZ 100.

Spanish bond auction canceled.....  They will revert to distribution thru banks.

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