sep 16, 2013 outlook

It’s worth considering the current Shiller P/E near 24 (S&P 500 divided by the 10-year average of inflation-adjusted earnings) in the context of rising yields on competing securities. Both the Dow Jones Utility Average and the Dow Jones Corporate Bond Average are down more than 5% from their recent 26-week highs. Note recent 10 year treasury yields almost double lows and Verizon 10 year bonds over 5 %.

The last time we saw this combination of weakness in interest-sensitive sectors with the Shiller P/E even above 18 was in September 2008, just before the market collapsed that year. We observed a similar deterioration following overvalued, overbought, over bullish syndromes in January 2000 (though be aware that it took several more months of top formation for the market to decline in earnest) and June-September 1987. This illustrates our discomfort with speculative risk-taking here. We could be witnessing a 40-50% decline starting later in the year (I believe it could be under way by mid October).

In the mean time there is next week. the 23TD cycle should have topped by Tuesday Sep 17 and head down (some refer to this as the lunar cycle as it approximate a lunar cycle in calendar days - it also approximates 1/4 of a wall cycle).   This seems to be the more dominant of the shorter cycles, but the 11-12TD cycle bottoms as the 23-24TD cycle tops. The 1/2 Wall cycle remains up but will be losing upside momentum soon.

Summary for the week - up Monday into Tuesday and down starting Tuesday into end  of the week,  For the week the market declines around 1.5%??

GL

sep 09, 2013 weekly outlook

The market continues to edge higher as a shorter cycle (the 23TD cycle) tops next week.  I expect a high of 1670 or higher by end of the week.

GL traders

sep 05, 2013 outlook

As I suggested last week it looked like for the short term we were in for a bottom.  Been a bit volatile, but the market is up so far this week (and should continue - best guess is about a week).  I expect we will try to test old highs, but the SnP  will fall short (1700ish?).   Lots of tests ahead - Syria, Fed taper (or not), debt limit, budget issues, Asian currency failures (India rupee), etc.  So I doubt any move up will be long term and expect to see market failure no later than mid Oct.  So Sep up first part of the month with weakness developing by mid month....

Here is a visual:

Watch for topping to reenter RWM...

aug 28, 2013 outlook

Appears we should be at a cycle bottom for shorter cycles, so we should see some upside over the next couple of weeks.  Will we retest old highs?  I expect a 1700 high (just short of old highs) is possible.  So if you bought RWM consider taking profits.

Here is how it looks:

 

Volatility has increased with shorter moves up and reversals down.  May want to sell before long weekend as short term envelope chart starting to say "sell":

aug 25, 2013 - outlook

Appears a short term bottom was set and I would expect an attempt to rally next week.  Then early in Sept a short pullback and a rally into  Oct and a more sustained pullback into the end of the year the last 2 months of 2013.

Here is how it looks from the alignment of the cycles:

 

I'll try to update shorter cycle impacts as we progress....  I have a limit order to  buy
RWM currently.

RWM now OK to buy:

 

RWM up almost 3% since yesterday afternoon:

 

Aug 24, 2013 - Gold cycles

There is never just one cycle, but multiple cycles at any given point in time.  Sometimes though cycles align so that multiple cycles bottom or top at the same time.  This happened with gold in June as a bottom was set. 

It would be so easy if we could just pick "a" cycle and get the complete picture, but we can't.  If we look at the gold chart we see a 13 1/2 month cycle,  a 6 3/4 month cycle (often identified as a 7 month cycle) that is half the 13 1/2 month cycle, the Wall cycle (4 1/2 month or 1/3 the 13 1/2 month cycle or 20 weeks or 142 days) and a half Wall cycle (10 weeks). 

On the following charts I have tried to identify times when the effect of each of these cycles is  visible and somewhat dominant.  We are now in a time where all these cycles bottomed together and turned up together giving us a vigorous bounce off the bottom.

See for yourself:

Aug 19, 2013 outlook

Had opined we might see a short term trend change last week.  We may have seen a bottom Friday (OPEX expiration) or early this week.  Time will tell, but we have hit the top of the target area I had been looking for 1645-1655 (so we could see a bit more down?). 

Here is a visual of the outlook:

As I indicated in comments yesterday before close I had sold part of my RWM position for a modest gain (~~ 2%).  Today I am watching RWM to repurchase those shares.  Here is my approach:

Buy signal early tomorrow (fill the gap and channel lines cross?)...

Aug 13, 2013 update

 Jim Chanos notes that more stocks are trading above three times book value today than at the 2000 market peak......  But over valuations can last longer than we expect.

It looks like we should see a short term bottom this week:

2013 chart with data thru July:

Best guess - short term bottom set (short term top around Aug 20-21):

aug 06, 2013 update

Finally we may be getting a short term trend change.  I'll reserve opinion on whether this results in a longer term change.  We know we need a budget (continuing resolutions?) by end of Sept.  We have a debt ceiling that may cause contention by Oct?  And we may see the FED taper by Sep/Oct. 

Currently my charts are pointing to Oct-Dec as a larger/longer down turn....

Aug 2013 outlook

Got some minor weakness early in July (less than expected) and then up, up and away last 3 weeks of July.  Market less weak than I expected in July as I expected summer sluggishness most of the month to give us sideways to down action.

Appears we might get weakness early in August first 8-10 trading days and finish with some upside push the last part of August.