Saturday, March 19, 2011

comments and outlook 03-21

Last week's outlook was nothing to be proud of.  With the news whipsawing the market  - it seems every night while the market was closed  (or data releases in the morning) had the market gap  down or up.   Not all market movement is cycle related (some is news driven like this past week) - so such moves are outside of what the cycles are able to project.

I believe the 1 year cycle has now moved far enough past its top that it is starting to have some effect on the market.  The other two longer cycles (Kitchin and 4 year) still need some time to gather down side momentum and start having any substantial impact.

Here is a chart showing these longer cycles:

The medium length cycles (Wall cycle - 20 weeks ~ 100 trading days, 33 day cycle ) are moving counter each other.  The Wall cycle is down, and the 33TD cycle turned up mid-week.   The Wall cycle is far enough along in its down trend I expect it to have a bit more impact than the 33 day cycle.  So a slight down bias from these two cycles?

The 11 day cycle should have bottomed and be up.  So the combination of these 3 cycles is neutral to a slight up bias.  Here are the medium length cycles:

So we have the long cycles with a down bias, the medium cycles with an up bias.  Hard to say whether the overall bias is up or down from these cycles.  This only leaves the short cycles. The 5.5+ day cycle is up into Wednesday.  The 2.8 day cycle is down most of Monday, up Tuesday into Wednesday, and down the latter part of Wednesday and Thursday.   So we are flattish Monday, up Tuesday, turn down middle of Wednesday and down Thursday and close the week on Friday up.   Given this scenario I expect less volatility (if the news co-operates) and a range of 1265-1290 (+/- 5 pts either way). 

Here is the shorter cycles:

GL traders, looks like it is a buy the dips - sell the rips type of week.  Do your own analysis.  Use limit buy orders to get in at good prices and trailing stops to try and preserve any profits.

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