12-14-2011 outlook

I expected today to be mostly sideways.  This scenario was working too until the FOMC reported, then the market sank.  We are now at a discount to what the DPO (amplitude) for the 40TD cycle would suggest at this point in the cycle.(13days x 6pts = 78; 1158 + 78 = 1236).   So far the 20TD cycle seems to be winning in the battle between the 40TD cycle (up) and the 20TD cycle (down).  Still we could have some upside pressure building.

Tomorrow we have the 40TD cycle up and 20TD cycle down.  They should to a large extent cancel each other.  We got under 1224 support (50 DMA) and the recovered somewhat.  It appears that longer cycles down may be having more influence (lower highs, lower lows) since mid year. If so there will be a negative bias to the market for an extended period (see post on longer term outlook).

The 10TD cycle is up and probably tops by end of day. The 5TD cycle and 2.5TD cycles are down and should bottom by end of day.  It appears there should be a down bias tomorrow, but there may be some pressure to the upside with trading below the level expected based on the 40TD DPO being higher than the closing level.

So I expect we move in a range of 1215-1240 tomorrow and close within +/-5 points of today's close.  Here is my interpretation of the swing cycles:

GL traders.  Enjoy the holiday season.