Sunday, August 21, 2011

outlook for week of 08-22-2011

A couple of the cycle analysts have come out with updates this week.  My last post gave you the URL for David Knox Barker.  Cliff Droke also has a recent commentary:

In general both of these analysts are saying we are entering a difficult period now or in the very near future.  They also expect this to last for some time with a bottom being set in 2013 or 2014.  If true this makes it much more difficult to win trading from the long side.  So you need to identify a couple of inverse ETFs in which to place some money.  RWM is one such ETF (Russell 2000 Index).  It is not a double (or triple) inverse so the decay factor is acceptable.  One acquaintance claims this should be a core long term holding for the next 2-3 years.

Now the market probably is not going back to 2009 lows (or lower) in the next week or month, but over a period of 2-3 years.  Our focus will continue to be shorter term moves.  Just realize that rallies are apt to be less robust and may often get truncated if as claimed by Barker and Droke we are entering a period of long term decline.

The 20 week (Wall) cycle should have bottomed the first week of August (see Barker's article) and now gaining some upside momentum.  The 34TD cycle should remain up for about a week.  The 22TD cycle should have bottomed this past week and now be up.   So there should be an up side push during the week.  If this happens use it to trim you long positions.  It may also provide a good entry into an ETF like RWM.

This up side push should top around the end of the month.  Here is the SPX:

GL traders.  The bear may be lurking in the shadows for a long time.
Bonus:  RWM chart:

Potential entry under $33.    


  1. Thanks Inlet wondering what window dressing will lead to end of Aug? Usually it's been huge buying a few days prior but this month may be huge selling? Also I believe Shadow said we would be going off a cliff this week wonder what he was looking at.

  2. Hi Inlet

    I have a novice question about a specific stock BPZ and oil and gas company working in Peru.

    The short interest in BPZ has increased from 13,021,276 in Dec to 23,041,382 in July. The price of the stock has decreased from about 6.50 in march to about 3.00 today. Can one look for a short squeeze in the stock?

  3. Tom - I claim no expertise in the oil production area. Not sure how stable the governments are in Peru and Ecuador. Lots of short shares can lead to a squeeze, but probably would not happen until oil turns. So - wonder how the events in Libya affects oil supplies (and prices).

    I suppose you would need to watch for an up move to start on heavier than normal vol to determine if a short squeeze is indeed happening.

  4. 38dd - not sure what, but I suppose the news out of Libya could divert attention from the situation in Europe short term.