Wednesday, August 31, 2011

Outlook for 09-01-2011

I said in last evenings posted I felt at the end of the day the bias would be neutral.  We were up, but not by much (I'd call it neutral).  Looks more and more like a topping process. 

Of course the first couple of days of the month we normally get inflows from IRAs, 401Ks and pensions.  I expect tomorrow will reflect this, but I doubt the inflows will be enough to make a huge impact.  Still it could result in some up side push.

The 34TD cycle is down.  The 22TD cycle is up for 2-3 more days.  The 11.2TD cycle is down.  The 5.6TD cycle is topping and the 2.8TD cycle is bottoming tomorrow.  When you add it all up the bias continues to be neutral.  We may well test today's high again, but by the end of the day the market should be little changed.

Here is the SPX swing cycles:

Gl traders, be careful and take some profits off the table...

Bonus info - crossing of SMAs:

Yes, I look at things in addition to cycles and so should you.


  1. Inlet,
    I am going to go out on a limb and predict that these last two days this week will be overall up for the market--and perhaps up significantly.
    We are heading into a 3 day weekend which tends to be bullish. There are the mutual fund inflows you mentioned. Trading volume these next 2 days could be low, as traders leave early for the 3 day weekend. Bearish articles are everywhere and short positions are being set up.
    I have read that these robotic trading programs can see building short positions. With a potential low trading volume situation, these programs could squeeze stock prices to the upside.
    I am hoping to sell into strength these last 2 days & perhaps set up some shorts on Friday.
    We will see what happens.

  2. Inlet - That crossing of the SMA is a dead on sign for a death cross.

  3. Shadow - two things make these crossings more significant. 1) the 200 SMA is flat to down 2) the index trades below the SMAs.

    This is only the third time this has happened this way in the last decade and the prior two times it was followed by a large sell down. Not saying it is destined to happen again, but that it is a setup to do so.

  4. Doctrader - always appreciate other's thoughts. My aim is to try and interpret the cycles not guess how the news/data releases will impact the market (be as objective as possible). I some times mention those other things and try to relate how they may fit into the interpretation of cycles. Hopefully I get it right more than I get it wrong.