Outlook for September 2011

August ended on a flat note (slightly positive).  The first couple of days of a month you normally get new money (IRAs, 401Ks, etc) into the market.  So it would not be unexpected to see that happen the first couple of days of September as the 22TD cycle tops. 

So the first couple of days could mark a high point for September.  Why?  It is the top of the last of the longer of the swing cycles the 22TD cycle.  The 22TD cycle will bottom the middle of September (Sept 16 or 18?).  Down now and expected to bottom the middle of September is the 34TD cycle.  Also down and expected to bottom the middle of September is the 67TD  (65-70) cycle. 

It appears with these cycles bottoming together the odds favor a new 2011 low in middle September.  Based on the DPO (trend amplitudes) that low point could be 200 points lower that the Aug 31 high of 1230 or 1030.  After that we should see a bounce into the end of September which I expect will recoup about 50% of any loss in the first half of September.

Here is a chart of the SPX showing these longer swing cycles:

If you liked August you may love September.