10-2011 outlook for October

According to Droke the 6 year cycle tops in October and we should see impact on the market.  The Kitchin cycle (42 months - also known as the inventory cycle  - see David Knox Barker) should have topped some months ago and probably accounts for some of the market weakness we have seen since April.  Read the article references I recently posted for more on their views. 

The 9 month cycle topped  in August and is down. The Wall cycle should top mid October and turn down.  So we have the 6 year cycle topping and turning down.  The Kitchin cycle is down.  The 9 month cycle is down.  The Wall cycle will turn down by mid October.  So the longer cycles should exert some downside pressure during October.  That is the big picture:

Of course, we are more interested in shorter cycles we can swing trade.    The 11.2TD cycle should bottom around Oct 7.  Then we should have 34 and 11.2TD cycle topping together around  mid October.  Finally we should have the 22TD cycle and 11.2TD cycle should bottoming together around  Oct 24.  So we want to be short the first week of Oct, then long for about 6 days and then short into the Oct 24 time frame.  Here is the SPX with these cycles:

Keep in mind if the longer cycles provide the expected downside pressure the S&P should break below 1100 in October, but unlike some I do not expect we will see a huge drop below that level yet.  Let's say 1030?
Good luck traders.  I hope Oct is a good trading month.

09-30-2011

We finished green on the DOW and S&P (red NAZ) so my call for a green day was partially right.  Job #s a bit better than expectations and Germany voted yes on the Europe bailout thing...  Seemed the market had every reason to rally and it did early.  By around 3 pm though the market was down and then turned up the last hour.  Every reason in the world to test highs from earlier in the week and we did not.  This up, down, up volatility seems like a topping process to me.  So how about tomorrow?

We may get some up action early on, but I believe if we do it will fade rather quickly.  I would think any end of month and end of quarter window dressing is completed.  It will be Monday before we see new pension/401k money entering the market.  So we have 2 shorter cycles topping early tomorrow and that should turn the market down in the afternoon.  I believe we will close lower tomorrow (just hoping to get some QID under $50).

Here is the SPX swing cycles:

GL traders, do your own analysis.  Be careful.  I will try to provide a monthly outlook soon.

09-29-2011 outlook

Today was red as expected.    Thought we would see the low earlier than the close with some bounce by the close.  Still we got the general direction right if not the exact course for the day.   What about tomorrow?

Tomorrow should be an up day.  The 5.6TD and 2.8TD cycles should have bottomed at the close (or will early in the morning).  So it appears "all" the cycles we follow for swing trades are up.  So - tomorrow could see a strong up day. 

Here is the SPX swing cycles:

GL traders. 

09-28-2011 outlook

Today closed green as expected.  The run up (as always) exceeded expectations.  The expected pullback came the last hour (I had thought it might happen earlier in the day).  I believe the strength of the pull back speaks to the downside pressure of the shorter cycles.  So what about tomorrow?

Tomorrow by mid day the 5.6TD cycle bottoms,  It also appears the 2.8TD cycle may have turned a bit early.  If true we will see the downside continue tomorrow morning and last the first 3 hours or so of the day.  Because I believe there has been downside pressure building it could be sizable.  By afternoon the pressure may subside and we get a push up in the afternoon.  Can it recoup the earlier loss?  I believe tomorrow stands a better than even chance of being a down day  (maybe the best odds for the week).

Here is the SPX swing cycles:

GL traders.  Do you own analysis.  Your comments are welcomed.  RJA was not acting as expected so I sold for a small profit today.

Update:

09-27-2011 outlook

As expected the market had an upside bias.  For most of the day the market was mixed/flat (Dow, S&P up, NAZ and Russell down).  The surge in the last hour exceeded our expectations.  So what about today?

Gold may have found a near term bottom.  The news out of Europe should support the market (of course by next week who knows about any plans being discussed in Europe).

The bias remains up and the final hour surge probably means we gap up to open the day.  I expect the shorter cycles may have built enough down side pressure to cause a pull back at some point during the day, but the day should be up at the end of the day. A level of 1180 would not surprise during the day.

The primary change from yesterday is the 2.8TD cycle should turn up during the day and support the upward bias. This leaves the 5.6TD cycle as the sole down cycle.

Here is the SPX swing cycles:

GL traders.  Do your own analysis.  Feel free to share views.

09-26-2011 outlook

Last week we had a good week calling the market turns.  Maybe too conservative on out downside projections, but got the direction right.  So how does this week start off?

It appears we set a bottom Thursday afternoon as the 11.2TD cycle bottomed.  Friday was a transition day as the 11.2TD cycle turned up (and the 2.8TD and 5.6TD cycles turned down).  Monday continues this transition.  With the 3 shorter cycles offsetting I expect a somewhat flattish day.  But. the 20week (Wall) cycle, the 34TD cycle and 22TD cycles should be up.  These cycles have not shown a lot of strength recently, but I suspect they will tilt the bias to the upside. 

There is a lot of news/rumors floating about Greece and Europe.  I saw nothing of major significance out of meetings by major financial organizations (IMF, World Bank, etc).   Still something could happen tonight (either negative or positive).  Being unable to predict this we will stick with the cycle interpretation.

Her is an SPX chart showing the swing cycles:

GL traders.  Be careful, do your own analysis.  I picked up some RJA (ag etf) Friday.

09-24 GLD

Seems to be a lot of interest in the PMs (gold, silver) with the $100 decline in gold.  I believe the CME just increased margins (again)... that should help... hehehe.

So I looked at the GLD etf.  Appears the CCI is giving a buy signal.  Of course, we'd like to see confirmation by other indicators.  I suspect by Mon/Tue the envelope charts will confirm.  Then by the end of the week we should get a second confirmation of bottoming cycles.  My opinion - gold is almost at a buy point, but not quite yet.

Here is a chart showing the points discussed above:

GL traders.  As always - do your own analysis and be careful.

October 2011 Spiral calendar

http://spiraldates.com/2011/charts/scores_1011.png

October spiral calendar dates for US stocks show three turn dates on the 8th (a Saturday), 13th, and 20th-21st. The first and last days of the month also have scores of 3 which is above threshold (2.5) for a turn date as well.

The large peak on the 20th-21st is f1 – one lunar month or 29.5 days – from the start of the current decline on 9/20.

09-23 latest article by David Knox Barker on long wave cycle

Global leaders are in shock at the specter of a sovereign debt default that is shaking the global financial system to its core. The hopes pinned on emerging markets are fading fast, as even the economies in China, Brazil, Russia and India cool as anticipated during the long wave winter. The perfect storm is gaining strength. Emerging markets are stumbling; corporate profits will now take a hit when the global economy can least afford it.

https://longwavedynamics.com/?page_id=4517

09-23-2011

We were down for the day on 09-22 and down hard.  But what does tomorrow bring?  It appears to me the 11.2TD cycle should bottom tomorrow by mid day.  At the same time we have the shorter 2.8TD cycle and 5.6TD cycle topping and turning down.

So IMO we should show weakness earlier and may recover ground in the afternoon.  We may see 1100 on the S&P and reverse.  IMO that is the probable scenario.  So intra-day volatility but not a lot of change by the end of the day.

Here is the SPX and the shorter swing cycles:

GL traders.  Comments and views are welcome.

09-23 buy the dip or not?

We always have to answer this question don't we?  Longer term I am fairly negative, but we are looking for a swing trade - not a long term relationship.  So I look at the cycles (and other TA indicators) for answers.

So I looked:

1) the 11.2TD cycle which appears to be dominant should bottom by mid day tomorrow (buy the cycle bottom).
2) the CCI has now moved below -100 (usually a place to buy).
3) The lower envelope line crossed (a buy signal).

The weight of the TA says tomorrow (Friday) may be the time to buy.  Here is the SPX  showing the points mentioned above:

GL traders.  If you have indicators that agree or disagree please share.

09-22 Droke updates info from Kress

Mr. Kress believes that for a more practical contemporary evaluation, the 6-year secondary direction cycle is more effective. He writes, "The 6-year peaked in early May at the height of our 'debt crisis,' a continuing indication of the systemic problems. Historically, the peak of the second 6-year is higher than the peak of the 12-year. However, May's 6-year [price] peak is significantly below the 12-year cycle's peak." He adds that the declining Mega Cycle of 120 years is clearly taking its toll.

http://www.safehaven.com/article/22624/crisis-high-2011-and-the-next-credit-crash

09-22-2011

The market was down and down more than I expected....  Not much doubt in my mind the bias is now down for the next 3-4 days.

Tomorrow we have the 2.8TD cycle up and the 5.6TD cycle up.  The 11.2TD cycle is down.  By now this 11.2TD cycle should be accelerating into its maximum downside momentum.  So even though the 2 shorter cycles are up the best case for the bulls IMO is a flat day tomorrow, but I believe it could easily be down 10 S&P points.

Here is the SPX showing these short swing cycles:

GL traders,  My RWM position looking good, QID position is lagging.

Did you miss these sell signals?

1. On Friday the CCI broke above +100 (I believe I mentioned this as being on my radar)
2. The upper EMA envelope lines met (or crossed) - sell signal
3. The MFI projected top time was achieved (top, bottom, projected top)

Maybe you have others you would like to share.

Her is a SPX chart showing these signals and a projection of the downside:

With 3 signals (that I have found to be fairly reliable) occurring together there should have been little doubt as to the market direction.  GL traders - do your own research and share.

09-21-2011

Well today was flat....  As I mentioned a couple of times last week it seems the shorter cycles are dominant (for the time being).  That continues - Friday's early  S&P 1220 level to today's top (around 1220) was the top-to-top of a 2.8TD cycle I believe.

Trying to figure the best way to show the positioning of these cycles on a chart.  So the 2.8TD cycle is now down.  I believe the 11.2TD cycle and 5.6TD cycles topped Friday morning.  The 11.2TD cycle is down while the 5.6TD cycle has bottomed (or is near a bottom) and is turning up.  With this alignment tomorrow should be down.  Given recent volatility that could be 15-25 points on the S&P.

Here is the SPX showing these short swing cycles:

GL traders....  all is a bit confusing currently - maybe we get a clearer picture soon.

09-20-2011

Yesterday was down (suspected it would be).  Today looks like it could go either way as cycles are turning, possibly a flatish day.

09-19 from Droke

If after the cycle has peaked the European debt situation worsens, investors will likely move very quickly back into the safe haven investment vehicles, which includes gold.  Following the peak of the previous 6-year cycle in 2005 gold and the gold ETFs experienced a strong rally in the last couple of months that year and into the following year (see chart below).

http://www.financialsense.com/contributors/clif-droke/2011/09/19/another-round-of-consumer-price-increases-on-the-way

outlook for 09-19-2011

Not a certainty, but it appears we may have set a top Friday morning as the patterns suggested we might.  If so then next week will probably be a down week.  Let's face it - the market was up about 5% last week and there is no way that can continue longer term because 5% a week long term would be 250% a year.

I am trying to determine exactly how I need to adjust the placement of cycles on my charts.  For now though it appears the 11.2TD cycle in this sideways market is providing most of the market movement (up one week, down the next week).  The 5.6TD cycle seems also to be contributing.  The longer 22TD cycle and 34TD cycle seem almost dormant at this time as we move sideways with sizable weekly swings. 

A couple of things on my radar.  Thursday according to the spiral calendar ( http://spiraldates.com/?p=832 ) should have been a directional change day.  T-Theory is projecting a low end of  the first week of October  ( http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID4511625 ) which would work out with the cycle patterns if we are down next week and then up into the first week of October (11.2TD cycle span).  Finally, I noticed the CCI on the SPX exceeded +100 which usually indicates a top (sell) on Friday.

Here is the SPX swing cycles (I have moved some cycles around - not certain so I may have to make more changes later as data becomes available):

GL traders.  If next week continues up I may be hosed on my QID and RWM holdings.

outlook for 09-16-2011

Today was not as expected.  It seems clear that I am not correctly interpreting the data.  In looking at the chart I see a "W" which spans 11 days and should complete the right leg tomorrow morning.  So the span will be about 11.2 days.  the left and right half of the "W" is about 5.6 days.  This leads me to believe we may have the 5.6 and 11.2 TD cycles topping in the morning.  If true then I need to reevaluate the positioning of the swing cycles as the alignment may have changed.  I will try to do a more complete evaluation over the week end.

Overall though it appears that we should see a top tomorrow.  We will see.

Here is the SPX swing cycles with the "W" pattern highlighted:

GL traders. Do your own analysis.

outlook for 09-15-2011

I told you on Monday that up side pressure was building from the shorter cycles, to expect a pop Tuesday or Wednesday.  Well we got a pop, more than I anticipated.  In looking at the data and events I believe I may have had the cycles placed something like half a day off because I thought we would see a high earlier in the day.  So I shifted the cycle placement  to reflect this.

All the cycles except the 2.8TD cycle should be down tomorrow, so a sell down is anticipated.

Here is the SPX swing cycles:

Gl traders, do your own analysis.  QID and RWM positions not looking so good at this time.

outlook for 09-14-2011

I was right about the first part of the day, but we did not get the fade I expected in the second half of the day.  So not a great call over all.  I expect the next 3 days to see a downside bias (may even get severe).  As I have stated before calling the exact turning point is always difficult for the short cycles.  It is always possible you have the placement of the cycles off and get a bad read.  Still I told you Monday we likely would get an up side push by Tuesday.

We may get a bit more upside in the morning, but we are entering a time period when we could see a hard push down as multiple cycles should bottom together Friday (could be as late as Monday). The 34, 22, 11.2 TD cycles are down (as is the 65-70TD cycle).  The 5.6TD cycle should top and turn down tomorrow.  The 2.8TD cycle should bottom and turn up.  This cycle alignment should result in a considerable down side bias by the end of the day.

Here is the SPX swing cycles:

GL traders, do your own analysis.  I bought back some RWM and QID today (was slightly red on my positions at end of day).

Latest articles by Barker and Droke

Barker:
"Investors tracking large cycle turns and traders tracking small cycle turns to buy or sell can apply the MCD approach of price, time and sentiment to any global market or security. Tracking the market cycles in price, time and sentiment as an investor or trader can increase your odds of beating the averages,"
http://www.safehaven.com/article/22484/debunking-the-myth-of-the-efficient-markets-hypothesis

Droke:

"The most pertinent observation for the intermediate-term outlook concerns the 6-year cycle, which is scheduled to peak in approximately three weeks. Although the 6-year cycle is primarily an equity market cycle it also has a residual impact on the gold price. With the long-term economic cycles, including the 60-year and 120-year Kress cycles - in their final "hard down" declining phase through late 2014, gold should benefit from the economic bear market expected to worsen between now and the 120-year cycle bottom in 2014."
http://www.safehaven.com/article/22495/in-a-year-of-massive-change-golds-status-remains-unchanged
Enjoy the reads.

outlook for 09-13-2011

Looks like the last hour did in my expectation of a "red" day.  We may have gotten the push up just a little sooner than I expected....   With the market closing near the day's highs you often get follow through the next morning.

It appears we may get some more upside early in the day.  I believe though that any upside will begin to fade by the afternoon (or earlier) as the longer term bias (34TD, 22TD, 11.2TD cycles) is down for the next 3-4 days.  May be an opportune time to reload RWM and QID in the morning.  We will see.  In summary - up early and then fade later.

Here is the SPX swing cycles:

GL traders.  Do your own analysis.  I will be watching for QID to break below 52 and RWM below 33.75 for potential entries. How much below - depends on how the market acts tomorrow morning.

outlook for 09-12-2011

As I told you Friday the cycles should be down and the market should end up "red".  It did.  As to last week the market was down, but down less than I thought it would be.

Today it appears we will start off red.  We have a couple of shorter cycles now up so we will have some pressure building to the upside.  Will this impact by end of the day?  I doubt it will, but Tuesday or Wednesday I would not be surprised if we got a upside push.  So I believe the bias today will be down.

Here is the SPX swing cycles:

GL traders.  Do your own analysis.  Hope to close out my RWM and QID positions today.

outlook for 09-09-2011

Yesterday's call was fairly accurate, up early with a down bias into the close.

The short cycles are down, so we should see a red day.

Here is the SPX swing cycles:

GL traders

Note:  I have weekend plans so I may not post outlooks until late Sunday or Monday morning.

outlook for 09-08-2011

Darn am I red faced.  I was expecting a sinker and got a fast ball today.  Hard to be much more wrong than I was today.  Oh well, I had a few good days and I was due a loser.  The short cycles seemed to have built up some pressure and exploded up today.

Maybe a bit more upside in the morning (test 1208 level?).  But nearly ever cycle is down or ready to turn down. The only cycle up all day is the 11.2TD cycle (assuming I have the placement properly).  So we get a bit of up bias early and then sell down.  What will be the trigger.  Doesn't Benny have a conference in the morning?  Maybe Benny will say something the market doesn't like.  We will see.

Here is the SPX swing cycles:

 GL traders. 

outlook for 09-07-2011

I said that the bias today should be down and the day would be volatile...  Check.  I opined by the end of the day we could see a 15 point decline on S&P.  We saw a bit less than that - 50% credit.  Overall not a bad call for the day.

Tomorrow (probably before the open) we should get a ruling from the German courts on the constitutionality of bailing out other EU countries.  Probably will add more confusion than clarity to this issue. 

May get a little continuation of the end of day rally (close the S&P gap?) and then continue the move down.  The 2.8TD has topped or should top early in the day.  So that leaves the 5.6TD  and 11.2TD cycles up.  The 22TD cycle, the 34TD cycle and the longer 67TD cycle are down.  So the bias tomorrow should be down and we should have another red close (10-15 points?).

Here is the SPX swing cycles:

GL traders.   still holding my short ETFs (QID and RWM).     

outlook for 09-06-2011

It appears the 22TD cycle has topped as we were expecting in this time frame.  So that means the 67TD (65-70 TDs) is down, the 34TD cycle . the 22TD cycle is down.  This provides a lot of head wind for the shorter cycles this week.

The 11.2TD cycle, the 5.6TD cycle and 2.8TD cycle have turned up.  Normally we would expect an upside bias with these 3 shorter cycles up, but any up side pressure from these shorter cycles is apt to be over whelmed by the longer cycles down.  So Tuesday could be a volatile day, but at the end of the day the S&P is apt to be down 15 points or more

Here is the SPX swing cycles:

GL traders.  Do your own analysis.

Outlook for week 09-06-2011

I said last week up into mid week and down last part of the week was my outlook.  The week was falt as I opined it would be.

There are several things that could happen next week.  The German court could declare the bailouts of other Euro countries unconstitutional.  The Italian parliament is to vote on a new austerity program and seem to be backing away from prior commitments (lots and lots of amendments). Then Barry has his speech on jobs (more of the same?).  Any (or all of these) could negatively impact the market.  These are the known unknowns.  Then there is the unknown unknowns.

The cycles seem to anticipate one or more of these things will affect the market negatively.  The 67TD cycle (65-70 TDs) is down.  The 34TD cycle is down.  It appears the 22TD cycle has topped.  Shorter cycles may inhibit the downside at times but I believe the over all direction is down next week.  On average I believe we could see as much as 20 point a day down on the S&P (70-80 points for the 4 days) and that we possibly could test the 1100 level during the week.

Here is the SPX and these longer cycles:

GL traders.  Have a good Labor Day.

Outlook for 09-02-2011

I opined that today would be flat and it was a good portion of the day, but it finally gave way to down side pressure.  According to my analysis (and best guess) the 22TD cycle should be topping.  A late sell off like today lends some proof that a topping is probably taking place (and may have already happened even though I have the 22TD cycle top as Tues after Labor Day).  I guess the question is - do we attempt one more upside try?

So we have the 34TD cycle down, the 11.2TD cycle is down, the 5.6TD cycle is down.  The 22TD cycle is up (may have topped or is topping) and the 2.8TD cycle is up.  On balance it appears the bias should be down tomorrow.  Given tomorrow we get monthly employment data for Aug and it is expected to be "not so good",  I believe it would take a big up side surprise to over ride this bias.

Here is the SPX swing cycles:

GL traders.  My RWM position was green at the end of the day.

Bonus info (see http://www.decisionpoint.com/ for additional information):

Always consider other sources in your analysis.