outlook for 08-31-2011

I opined we would see weakness early in the day but would recover by the close.  Even a blind squirrel finds an acorn every now and then.  It appears we are now in a topping process.  The 34TD cycle has topped and turned down.  The 22TD cycle is up for another 2-3 days.  The 65-70TD cycle is also down.

The 11.2TD cycle is down.  The 5.6TD cycle is up.  The 2.8TD cycle should top during the day.  Maybe a bit of upside bias in the morning, but that should fade by the close.  For the day I suspect the bias is neutral.  Maybe during the day we test the 1228 level (see the target on the chart in my outlook for the week of 08-29).

Of course any upside is in question as we get the ADP and Challenger Gray & Christmas  employment releases before the market opens.  Not expecting any big up surprises here, but if it happens it could lead to a gap open.  Later we get a PMI and a Factory orders report.  These could impact the market  (and I expect one or the other or both will lead to a market pull back which would be consistent with the 2.8TD cycle topping).

Here is a chart of the SPX swing cycles:

Gl traders.  If the market is in a topping process it may be time to take profits and consider positions that would profit from a pull back.  Your money - do your own analysis before you decide.