Thursday, June 23, 2011

Comments and outlook for 06-24-2011

Update  12:15  The morning was not according to expectations.  The longer cycles appear to be dominating.  So, we probably close the week on a down market.

I mentioned the possibility that we could see some carry over from Wednesday's close.  Then we got poor employment numbers followed by the action of the IEA.  These two news items exaggerated the move down.  I would guess it added 150-200 points to the down move as they supported the possible continuation of Wednesday's close.

Then during the day the shorter cycles kicked in and moved the market up.  By 2:30-3:00 about half of the severe early sell off had been wiped out.  Then shortly before 3:00 PM we got news that an agreement between the IMF-EU-Greece had been reached.  This supported the short cycles up move and by the close most of the early day sell off had been eliminated.

News can and does affect cycles.  In this case we saw the early market (that probably would have been down) down much more than one would reasonably expect.  So the news supported the probable market cyclic action and we had a severe sell off.  In the afternoon the IMF-EU-Greece news supported the push up by the shorter cycles and almost wiped out the early day sell down.  Still it seemed to me we could see the effect of the cycles (especially between these news events as the shorter cycles pushed up).  Yes, news can and does affect the cycles (depending on the news it may exaggerate or suppress the cycles).  Today was a great example of news exaggerating the cyclic moves.

Tomorrow we have the shortest cycle - the 2.8TD cycle topping  by midday.  The 5.6TD cycle is up,  The 11.2TD cycle is down.  The 22TD cycle is up.  So it seems in the early session we may have an up bias, but by afternoon it is down bias from the shorter cycles.

The 20week (Wall) cycle provides moderate down pressure.  The 1 year cycle is down hard as it pushes toward a bottom in early July.  So, in summary we may get a small rally early in the day followed by what could be a somewhat vigorous sell down in the afternoon.  If course that assumes the PTBs don't pull more rabbits out of the hat. 

Here is a visual using the SPY:

Gl traders.  Be careful.  My plan is to short (buy inverse ETFs) on any morning strength. You should make your own plan.


  1. Down pretty much right out of the gate today. I saw a blurb about more people asking withdrawals out of hedge funds than in a long time. In addition to French banks being warned by Moody's, now Italy's 16 largest banks plus 2 gov't agencies were put on notice. If this keeps up, that "hard down" is going to show up sooner rather than later.

    I have found it interesting that news items seem often to happen at just the right time to match what the cycles are due for. So maybe it is that the cycles are simply built in and the natural rhythm of things is built on cycles...not the markets so much, but just world occurrences. The ebb and flow...only so much good news can happen before some bad news happens???

  2. Cycles are part of all of nature. Nearly anything you look at from the molecular level to the universe operates on cycles. I know of no reason that would exempt news, business and stock markets. If you "google" cycles (not just stock cycles) you will find there are thousands of cycles that have been documented for different things.

  3. What is the cycle read for the first two weeks of July. Do we bottom next week and rally into earnings season? Thank you.

  4. I hope to post an outlook for July the weekend of July 2-3. But July should be interesting. I am looking for the 1 year cycle to bottom July 1 or July 5. Longer cycles have a longer turn radius (I'd say 3-4 weeks minimum per year) so for the rest of July the 1 year will be of little or no consequence. The 22TD cycle bottoms around the middle of July and turns up. The 20wk (Wall cycle) bottoms late in July. So look for a bottom sometime from mid July to Mid August. I'll try to be a bit more specific when I post my monthly outlook.