Wednesday, November 30, 2011

12-01-2011 outlook

Did I mention - nearing a bottom so things might get a bit tricky?  Darn if I didn't.  On Monday Europe had another plan for a plan the market rallied.  By Wednesday morning it seems the world's central bankers felt the financial system was in danger of freezing up and opened the money spigot full flow.  Nothing like a little central bank interference to mess up the cycles.....  This does tell us the central bankers are afraid of a major dysfunction in the world's financial systems.  We have seen this movie before and didn't like the ending.

Took a look at the cycles to see if I need to make adjustments.  At this time it is unclear what those adjustments would be so I will continue with current placement of cycles.    So what happens tomorrow?  I don't have a clue (the cycles are within 2 trading days of what should have been a bottom, but because of central bank intervention that outcome seems unlikely).  So, don't fight the FED and don't fight the tape.

Here is my interpretation of the swing cycles:
GL traders.  If the cycles provide a substantive dip might be a good time to pick up a couple of long positions, but be patient (cash in a market where you could get a freeze up is not a bad position - and IMO the European situation is no where near to being solved).  Keep in mind Droke said the 6 year cycle topped in October.  Also the Kitchin cycle (inventory cycle) should be down and people may decide after today's central bank action to not spend for Christmas.  So the setup for a major drop in the market may be nearly in place.

1 comment:

  1. Read some of the posts/comments from Phil Davis, Keystone, & the SKF board. There seems to be some agreement that a pullback will occur. Perhaps S&P getting to the 1260'ish level first, then a pullback.

    Overall though, when I look at some basic charts such as from Mutual Funds, I think we can go higher at some point. The RSI's & MACD seem to support going higher. Perhaps S&P getting to 1300 or higher.

    So, perhaps we do pull back a bit like your cycle charts imply. Then a longer move higher.

    Let's see.