Saturday, March 5, 2011

The week ahead 03-07

Volatility has increased.  This volatility has been difficult to trade because a large part it has been at the open, and unless you "guessed the open" and took a position the evening before you missed a large part of any move.  But, we have set no new highs, nor have we had a large sell off as we trade in a range of 1295-1335.  It appears that may continue in the coming week, trading the top of the range first part of the week (Mon-Tue?) and the bottom of the range  the latter part of the week (Thu-Fri?)  based on the positioning and topping of a couple of shorter cycles during the week.

See for yourself:

Don't forget the bigger picture though.  If we break out of this range chances heavily favor breaking to the downside as 3 significant longer cycles have topped in the past 6-7 weeks (Kitchin, Wall, 1 year).  I believe the downside push of these cycles are contributing to the volatility.  As these cycles attempt to push the market lower the FED steps in with POMO and pushes it back up (hence volatility).
As best as I can determine the near term range from these cycles (March/April?) is 1250-1350, but based on the direction of these cycles we should see the lower target first.  Take a look:

GL traders.  Do your own analysis

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