Saturday, October 6, 2012

October 2012 swings

In my last post I told you I thought the week would be up, and it was. Time to take a look at the month ahead. This means I will look at the longer 20 week (Wall) or 100TD cycle as well as the 33TD cycle. Also it appears the 22TD cycle is starting to have more influence.

The 100TD/Wall cycle topped toward the end of August. Often a cycle's largest impact is in the last part of a leg. The Wall Cycle is now at the point where I would expect that impact to start to exert its downward pressure.

Looking at two indicators (MFI - Money Flow Indicator) and DPO (Detrended Price) I see that the Money Flow is down even though the DJIA and S&P are near highs. These divergences between Price and Money flow to the down side often occur at tops (The divergence often is to the upside at a bottom).

The DPO shows us the part of the price due to cyclical activity. If I use a parameter of "51" then I should see the portion of price movement due to the 100TD and shorter cycles (33TD and 22 TD cycles for example). This movement appears to be around 109 points over a half span (top to bottom or bottom to top) of the 100TD (Wall or 20 week) cycle.

The 100TD cycle is down and should bottom around 11/9 (election week?) with a target of 1320. Here is a visual (chart) showing the points discussed:

The 33TD cycle should top by the middle of next week (Oct 10?). Keep in mind the Wall cycle is down. Also th upside according to the 33TD DPO (parameter "17") is near to being met.

Looks like a potential double top aound 1478 at this time. After that the 33TD cycle should be down thru late Oct or early Nov. So starting by the middle of next week we have the Wall Cycle and 33TD cycle providing some downside pressure through the latter part of October.

Will we get an 8-10% correction into the election? Appears possible.
Here is a visual high lighting the 33TD cycle:
Finally as I  mentioned the 22TD cycle seems to be emerging and becoming a factor in the cyclic activity again.   It is up (and should be for the next 6-8 trading days). 

This will somewhat inhibit the downside from the longer (Wall and 33TD) cycles.  So the next week should have a slight downward bias but the range will be limited by the upside from the 22TD cycle.  Can you say sideways for the next week?   The last 2 weeks of Oct (and first week of Nov?) has the potential of much more down side.

Here is a visual of the 22TD cycle:
GL traders.  Might be a good idea to add some inverse ETFs to protect yourself over the next few days.


  1. You're da man Inlet.

    Looks like the trading robots read your post.

  2. Dawg, good to see you are well enough to be posting again.

    Will be making your blog a daily visit.

  3. C_K good to hear from you.... Not sure how often I will post, but less than in the past I am sure as I focus on 2-3 week swings.

  4. Doc - too early to claim victory, let's see how the rest of the week plays out. Little harder down than I expected, but the latter part of the week may fix that. :)

  5. I noted on the chart that the 22TD cycle may have spent most of its upside. I also noted that the 33TD cycle appeared to have achieved its upside goal (and was topping). Both of these seem to be true and the longer cycle seems to be gaining downside momentum.

    I believe with my the pointing out the spirals predicting a top by October, a VIX trend change, Slow Stoch suggesting a top, MFI divergence etc that we may now be getting a cyclic confirmation.