Friday, September 30, 2011

10-2011 outlook for October

According to Droke the 6 year cycle tops in October and we should see impact on the market.  The Kitchin cycle (42 months - also known as the inventory cycle  - see David Knox Barker) should have topped some months ago and probably accounts for some of the market weakness we have seen since April.  Read the article references I recently posted for more on their views. 

The 9 month cycle topped  in August and is down. The Wall cycle should top mid October and turn down.  So we have the 6 year cycle topping and turning down.  The Kitchin cycle is down.  The 9 month cycle is down.  The Wall cycle will turn down by mid October.  So the longer cycles should exert some downside pressure during October.  That is the big picture:

Of course, we are more interested in shorter cycles we can swing trade.    The 11.2TD cycle should bottom around Oct 7.  Then we should have 34 and 11.2TD cycle topping together around  mid October.  Finally we should have the 22TD cycle and 11.2TD cycle should bottoming together around  Oct 24.  So we want to be short the first week of Oct, then long for about 6 days and then short into the Oct 24 time frame.  Here is the SPX with these cycles:

Keep in mind if the longer cycles provide the expected downside pressure the S&P should break below 1100 in October, but unlike some I do not expect we will see a huge drop below that level yet.  Let's say 1030?
Good luck traders.  I hope Oct is a good trading month.


  1. Inlet great call last week what are your thoughts on NFLX?
    Thanks for your blog and hard work.

  2. Inlet,
    Thanks again for your cycle work. I was hoping you would post the long cycles again.

    There have been alot of bearish articles lately and, of course, the techicals on the market do look bad. I am still suspicious though that the MSM's goal is to push everyone into the bearish mindset, and then unexpectedly release QE3 and catch everyone on the wrong side of the trade.

    Perhaps your long cycle work could show a time where enough cycles would be turning positive. Maybe that would correspond to an unexpected QE3 (possibly global) release. Just brainstorming.

  3. C88 - a momentum stock can take a long time to wash out once the momentum is broken. The hyenas (competetion) is circling (Dish/Blockbuster) and it may take a long time for NFLX to regain customer confidence. I think avoiding NFLX is the safe play.

    Thanks, have had a couple of good weeks getting the market direction right, but that can change at any time.

  4. Doctrader - the ultra long cycles are down into 2013/2014. The medium long cycles are down with the 42 month (Kitchin) not bottoming until late summer/fall of 2012. Best guess is we could get a bit of a rally starting in Dec/Jan, but there is lots of time to make that determination after we see how the next 6-8 weeks turns out.