Tuesday, November 1, 2011

11-02-2011 outlook

Well today was a sharp down day as I thought it would be.  We are now about 80 points below last week's high on the S&P.  Question is do we have more downside and if so - how much.  So I took a look at the DPO for the 22TD cycle (that is the one set to bottom tomorrow if I have the cycles positioned correctly on my charts)..  The DPO  detrends the cycles giving us the expected amplitude.  So here is what the DPO projects:

As you can see the DPO gives us a downside target of around 1194.  I have heard 1208 and 1183 mentioned and would argue with neither as I have not included the potential impact of  longer or shorter cycles.  Most of the other swing cycles (all except the 2.8TD cycle) should be down and bottoming by the end of the day tomorrow.  So I would think 1183 more likely than 1208.  But you should do your own analysis and decide - I am providing you a road map not a GPS system.
Here are the swing cycles for the S&P:

In short I expect the day to at least dip in the morning.  Pinpointing the exact time of a bottom is difficult and it might be mid day instead of end of day.  Who knows - maybe we get something at 2:15Pm from the FOMC meeting that turns the market (has happened before). So be prepared for a bottom tomorrow.  If I am off by 1 day we may have seen a bottom today.... 
GL traders.  Be careful and be ready to change horses.


  1. Good stuff kemosabe......I'm prepared to be nimble and take advantage of whichever scenario develops.

  2. c_k - looks like we open up. Maybe we saw a bottom already. So my dip at the open scenario looks wrong. Of coursem given market that could change quickly.

  3. Looks like we opened up green. But nothing is really fixed.

    I am questioning whether then markets might run higher this morning, but sell off in the afternoon. Most of the sites I read feel that Ben won't announce any QE3 yet. So, if he doesn't say anything positive this afternoon, we could sell off.

    Overall, I do feel the markets will be higher at the end of this year. One site I read said S&P = 1370.