Monday, February 21, 2011

The week of 02-21

Took a look at the futures as the market was closed today.  With all that was going on in the ME (Libya a major oil producer in particular) the futures were red and oil up as one would expect.  Is this the catalyst to reverse the market for the time being?  Maybe we find out on Tuesday (the European markets were down today).  Interesting that CNBC had people in reporting on the ME situation all morning.  Don't worry about Libya - the Saudis have plenty of capacity to make that up (or so seems to be the party line).

As I have indicated the past couple of weeks I believe we should be at a point where we get a trend reversal.  It may only be for 4-8 weeks, but to go much higher the market needs a correction to reset expectations.  Everyone is on edge waiting for that correction and unwilling to commit more on the long side until that happens.  So in that respect a correction is viewed as a positive by the bullish.

The cycles keep topping so sooner or later we get that correction:
  • The 10 year cycle is down  (Juglar cycle - 3x the Kitchin cycle)
  • the Kitchin cycle (41 months) is down
  • the 2 year (24 month cycle) is up
  • The one year cycle is down
  • The 7 month cycle (just topped)
  • the 20 week  (Wall) cycle is down
  • the 22 day cycle is down
  • the 11 day cycle is down 2 more days
So what is keeping the market up?  The FED may interrupt the natural flow of the cycles on a temporary basis, but don't fool Mother Nature - it ain't nice.  So with all that is going on in the ME we have the perfect excuse for a cyclic downturn.

Here are the charts:

GL traders.  Do your own analysis.

No comments:

Post a Comment