Tuesday, November 8, 2011

11-08-2011 outlook

I had projected we would see the S&P down about 4.25 points on Monday in my weekend post.  Instead we were up a single digit points.  So this got me to thinking about my approach using DPOs.  I believe this approach has validity.  In thinking about this I zeroed in on the 5.6TD cycle.  I said it would have an average move of 21 points (and would account for the 2.8TD cycle).  I believe that is true but incomplete.

If we have an average move of 21 points for the 5.6TD cycle we could have it move 31 points one day (5.6 and 2.8 moving up/down together) or we could have a move of 11 points if one is up and the other down and average 21 points.  On days when we have tops and/or bottoms being set we may hit the average of 21, but in most cases we will be above or below the average.   So saying the 5.6TD cycle accounts for the 2.8TD cycle DPO while true is not the whole story.  Looking at yesterday I believe the 2.8TD cycle moves about 11 points a day.  So -4.25 + 11 is +6.75 or nearly what the move was yesterday.

Today the 2.8TD cycle is up while the 5.6TD cycle is down most of the day suggesting these 2 cycles will contribute about -10 points of movement to the S&P and that should give us a close around +6 points for the day.

Here  is the SPX swing cycles:

GL traders.  Do your own analysis.


  1. Inlet,
    Thanks for all your work. You are doing a great job trying to explain an objective approach to these intermixed cycles.

    Phil Davis is still bullish and is targeting 12200 on the DOW (closed at 12068 yesterday). He also implies that if 12200 could hold, the market could move higher.

    Keystone Speculator is also targeting 12200 on the DOW, but believes negative divergence is being set up, and the markets will eventually sell off. Could trade sideways for several weeks, but Keystone feels eventually will trade lower.

    I am still waiting for overbought or oversold conditions before initiating any new positions.

  2. Doctrader -

    I hope the system I am trying to develop in projecting market movement works out. I have not seen the DPO used with the approach I am taking, but I believe it is logical.

    Of course there is a lot of room for error - like misjudging how the cycles are aligned in relation to each other, but maybe this approach will also alert us to that.

    If you see ways in which we can improve and develop a more robust approach I am listening. Right now this is a theory that I am trying to apply to the market movement.