Saturday, May 31, 2014

June 2014 - longer term outlook

I generally focus on shorter cycles from a few days to a few months (under 1 year).  Periodically I try to remind you there are longer cycles at work and those cycles can result in large moves in the indexes.  Often the downside correction covers shorter time frames than the upside and wipes out large portions of any previous extensive up side.

We can look at this in terms of time or we can look at it in terms of prices (or both).  First lets look at it in terms of time.  The market had major bottoms in 2002 and 2009 and major tops in 2000 and 2007.  These bottoms are 7 years apart.  The  tops are also 7 years apart.  2014 is 7 years since the last major top.  Notice that bottoms are about 2 years from the tops (right justified cycles).

Here is a visual representation:

So a major cycle top could be in place at any time  and a down trend could last 2years. 

Next how does it work out if we look at it based on price.  FIB ratios are a common way to analyze and project prices.  So what does this FIB analysis tell us:

And we are at the point where FIB analysis tells us we should be topping (prices).  So be very careful as both time analysis and price analysis agree - we could see a correction start at any time.  Notice the similarities to the sideways action since January with late 2007.

Post dedicated to TB for her URL references.

GL traders

update Jun 03: SPX has pushed a little above FIBS projection of 1923.44 above based on "A" leg down into Mar 2009 low at 666.67.  Looking at the most recent pullback of any substance in 2013 ("A" wave) we get a FIB projection of around 1928 (amazingly close to our other projection.  Here is a visual:

we get a downside projection of around 1795.

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