Sunday, July 27, 2014

July 28, 2014 weekly outlook

Overall earnings have looked good, revenues less good...  So far, the market has not responded much to these earnings.  Yes, SPX has set (barely) new highs.  But, the "M" pattern did not develop this past week, but the right leg may still develop over the next couple of days.  See for yourself:

Update 7/30 - With today's GDP report we have had considerable inventory build over the past 3 qtrs (around $200B).   The Kitchin cycle (a longer cycle of around 3.5 years) is sometimes referred to as the inventory cycle.  Once companies get too much inventory they slow down purchases because carrying inventory too long is expensive...  This pullback can lead to a stock market correction.  Here is a visual presentation:

GL traders


  1. Not a perfect "M" shape, but the right leg was put in place today. The width of the "M" often corresponds to the extent of the pullback.

  2. Does anyone know of a tool that is available to calculate these cycle dates (Wall, Kitchin)? Maybe an Excel formula? I'm not a math genius on formulas. I know I would have to account for the weekends, so that it would count trading days exclusively. I would like to be able to draw these on my own calendar for personal study, as I follow this site.

  3. There are lots of "software" systems, but some of the best (allow user functions like Metasoft?) are very expensive and probably not worth the cost unless you are trading large accounts... So a spread sheet like Excel may work. For example on the chart above I gave you the # of days for the Kitchin and Wall cycles. Keep in mind these are estimates and may vary. I will try to post a table of some other cycles and lengths.