comments and outlook for 05-31-2011

I mentioned in my weekly outlook we may be seeing the reappearance of the 34TD cycle.  It will take some more time to confirm that (or not confirm it).  But we can project based on it not re-emerging and we can project on it re-emerging.

First let's assume that the 34TD cycle is not coming back into play.  In that case we have the 22TD cycle up, the 11.2TD and 5.6TD cycles down. The 2.8TD cycle is up but should top by day's end.  So that is 2 up and 2 down...  My opinion is that could lead to some downside early and a bounce back later for a reasonably flat day.

Here is a visual for that scenario:

The second scenario is that the 34TD cycle is back.  This means some of the shorter cycles may have truncated and shifted into this new reality.  This means the 34TD cycle is up, the 11.2TD cycle is up, the 5.6TD cycle is down and the 2.8TD cycle is up and should top during the day.  In this case I would expect the market to move up early and possibly pull back once the 2.8TD cycle tops.

Here is a visual:

  
So tomorrow's action may provide us a data point that points us a little to the left or a little to the right.  I am inclined to think the 34TD cycle is coming back.  At this time that is more a hunch than a conviction. So I am going with up early and then down (still not a lot of movement).

GL traders.  Your money, you decide.