Saturday, January 29, 2011

The week ahead 01-31

Well - we got new highs this past week.  Looks like the 20 week cycle had a bit more upward pressure than I anticipated.  I had thought there was a good chance we had already seen the highs for the time being, but did allow as we might see new highs.  I told you last week  "expect the market bias to be down next week and possibly accelerate to the downside.  Use bounces to buy bear ETFs (short, buy puts)  and use drops to take profits.  Longer holding of short (or short type) positions should be protected with stop orders."  Not bad advice all things considered.  I picked up some trading shares in QID Wednesday around $10.70.  Missed the bottom on QID, but still ended up with a decent gain for the week (didn't look too good for a while).  Also, I had highlighted the OIL etf and said it was getting into a buy area.  Bought OIL on Wednesday and by the close Wednesday had a decent gain.  Wanted to let it run (if it would) so I set a stop above my purchase price which got taken out On Thursday morning.  Bought back into OIL later Thursday at a lower price (situation in Egypt made it look like a good bet).  By Friday I had almost a 5% gain and I closed out the trade.   So overall a good week and it appears the 20 week cycle may have topped Thursday and by Friday the bias was definitely down (and accelerated down).

So we should now have the 1 year and 20 week cycles down.  Does this means the market falls off a cliff?  Hang on Jethro - not so fast.  We have some shorter cycles up next couple of weeks that will prevent any such move near term IMO.  Still I think there is a much better than 50% chance the week will be down.  Here is a chart:

So how about Monday.   We have two cycles that have not yet bottomed but should do so during the day.  So we should start the day by selling down some and bottom around 1:30-2:00 and recover some in the last 2-2.5 hours of the session.  By day's end it could be a flattish day (depends on the longer cycles).  Here is a chart:

BTW - I expect/hope to sell my QID trading shares Monday morning for a nice gain. 

GL traders - be sure to do your own analysis.  I try to provide you a road map not a GPS system.


  1. Inlet,

    I wanted you to know that I do read & appreciate your work. Please keep posting your blog.

  2. Doctrader - I don't claim I will always get it right, but every now and then I may add a piece of information that helps you make a good decision. That is my hope. Cycles are just one data point in your decision making. I encourage people do do fundamental research before risking money - but fundamental analysis is not my goal here.

    I try to steer clear of politics and the disagreement that causes. As to news and interpreting events others do a much better job than I ever could.

    So I try to maintain a clear focus on cycles and other things TA. Inform and educate are my goals.

    Finally, I appreciate the support and encouragement of people like you.