Comments and outlook for 08-04-2011

I told you late last week to expect more volatility.  I think you will agree that over the last 4 days we have gotten that.  This is typical as cycles make a final push to a bottom (or a top).  I was wondering how much bleed over we would get from yesterday's sell down and close near the lows.  It was considerable.  Still by the end of the day my long purchase yesterday was in the green and QID was below where I sold it.   My timing was not perfect (it seldom is), but I believe I cut back my short position at an acceptable level and increased my long exposure.

Expectations for the economic #s have been lowered enough that to beat or meet them should be no problem.  Today's ISM #s and ADP's employment #s were not good, but they did not result in continued sell down for the day.  So I do not expect much of a reaction to #s unless they are absolutely terrible over the next few days.  Of course, Europe could always blow up and that would definitely move the market down.

For tomorrow we have the 2.8TD cycle topping mid day, the 5.6TD cycle up, the 11.2TD cycle up and the 34TD cycle up (for about 3 weeks).  The 22TD cycle is down until around Aug 17.  If you have read the prior post and exchange between myself and Shadow you know there is some question about the exact status of the 20 week cycle.  I have it as down.  The 65-70TD cycle should also be down.

So I believe there is an upside bias, but given the position  of longer cycle (down) I would expect any move up to be moderate.  I think we will trade in a S&P range of  1247 to 1279 tomorrow and may end up by about 10 points on the S&P.

Here is a chart of the S&P (Note I shifted the cycles to the right by almost 1 day):

  GL traders.  Do your own analysis.  Be careful, any up move may be short term (5 or so days).