outlook for week of 08-22-2011

A couple of the cycle analysts have come out with updates this week.  My last post gave you the URL for David Knox Barker.  Cliff Droke also has a recent commentary:  http://www.safehaven.com/article/22220/economists-refuse-to-recognize-the-new-great-depression

In general both of these analysts are saying we are entering a difficult period now or in the very near future.  They also expect this to last for some time with a bottom being set in 2013 or 2014.  If true this makes it much more difficult to win trading from the long side.  So you need to identify a couple of inverse ETFs in which to place some money.  RWM is one such ETF (Russell 2000 Index).  It is not a double (or triple) inverse so the decay factor is acceptable.  One acquaintance claims this should be a core long term holding for the next 2-3 years.

Now the market probably is not going back to 2009 lows (or lower) in the next week or month, but over a period of 2-3 years.  Our focus will continue to be shorter term moves.  Just realize that rallies are apt to be less robust and may often get truncated if as claimed by Barker and Droke we are entering a period of long term decline.

The 20 week (Wall) cycle should have bottomed the first week of August (see Barker's article) and now gaining some upside momentum.  The 34TD cycle should remain up for about a week.  The 22TD cycle should have bottomed this past week and now be up.   So there should be an up side push during the week.  If this happens use it to trim you long positions.  It may also provide a good entry into an ETF like RWM.

This up side push should top around the end of the month.  Here is the SPX:

GL traders.  The bear may be lurking in the shadows for a long time.
Bonus:  RWM chart:

Potential entry under $33.