Friday, June 24, 2011

Comment and outlook for week of 06-27-2011

Last week I misjudged the downside potential of the longer cycles at the end of the week and  we ended the considerably lower than I had projected.  Hopefully I corrected that this week (but not over corrected). 

The 20 week cycle is starting to show more downside momentum in my opinion.  The 1 year cycle should make a final and very strong thrust as it should bottom around the 1st of July.  The fly in the soup is the 22TD cycle should also be topping around the end of the week about the same time the 1 year cycle bottoms.  The 22TD cycle has considerable amplitude (around 60 S&P points or 25 points for 5 days).  In isolation that would push the S&P to around 1295, but it is not in isolation.    The 20 week cycle is down and should subtract 20 or more points giving us a target of 1275 on the S&P for these two cycles.

In addition to this we have the 1 year cycle down very hard.  I believe this will lead to breaking the 200 day MA around 1263, the FIB at 1259.55 and then the Mar low around 1250 and FIB at 1247.50.  It this plays out then the S&P will free fall to the 1228.18 FIB and possibly lower by early July.  This could happen as soon as Fri Jul 1, but may be Tue Jul 5 (depending on exactly when the 1 year cycle bottoms).   My FIBs targets which I believe will contain the market move are 1196.81 and 1278.94

Now I realize this sounds a bit extreme, but I have to interpret the data as I see it.  Here are the FIBS:

Here is a chart of the SPX showing the 22TD, 20 week and 1 year cycle amplitudes overlaid to produce a target: 
GL.  Do you own analysis - my projections are pretty extreme - but the data as I interpret it seems to support those projections.

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