Tuesday, February 15, 2011

Comments and outlook 02-15

Longer cycles keep topping and the market keeps going up.  Hard to explain.  The most logical theory I hear is the FED with QE2 is pumping in liquidity with POMO and this supports up cycles and acts to dampen down cycles.  Now I don't claim to be smart enough to know if this is true and if true to what extent it affects the cycles.  It is true there are unexpected events that can affect the market (IE 9-11 caused a big spike down) and that cycles do not account for 100% of market movement.  Something like 25% or more of market movement is probably due to news and other factors.

If QE2 is the cause of cycles being supported to the upside and suppressed to the downside this is not natural and sooner or later nature will win out.  So we have this huge spring being wound tighter and tighter and the response will be substantial when the pressure is removed as nature takes its course.

as to the near term it appears that the short term cycles should be down most of the day.  As to what impact this will have I assume it will provide some downside bias.  Here is the short cycles:

Gl traders.  Don't forget to keep your stops in place to preserve gains.


  1. I've been averaging down my feb puts waiting for even a small pullback, but it never comes. I'm only down slightly (but overly vested) and wonder if I should cut my losses today, or if the market will come down a bit by Friday. Tough call. My thoughts are we have a couple down days, but my thoughts have been wrong the past several weeks.

  2. Good luck. Maybe today helped a bit.