Mar 31, 2014 - weekly outlook

Appears we should have 1 maybe 2 more days of churning in the lower half of the recent sideways channel and then we begin the advance for the first half of April.  I suspect the SnP500 will make new highs, but watch the NAZ and R2k to see if the  total market has topped (I suspect it may have, but funds and traders are trying to push the SnP500 higher).  By mid April we should see how profits are playing out.  Estimates have been cut enough that profits should meet lowered expectations and if that is all they do the market should correct (I suspect by May).

Here is the coming week (down 1% or so early in the week, but close the week 1% or so higher) in visual form:

GL traders

 

Mar 24, 2014 weekly outlook

The market seems to have established a trading range of about 3%.  the SnP 500 keeps making new highs (barely) while the Dow 30 keeps failing to make new highs by around 1 1/2 %.  I see no reason for this to change and if it repeats the week should be down around 2% into the end of March.

We have short cycles which should bottom this week establishing a mid-cycle dip. 

GL traders

Looks like a Head and Shoulders pattern has developed:

http://www.safehaven.com/article/33259/sp500-things-happen-in-threes

Mar 17, 2014 weekly outlook

Looks like the down trend could last a bit longer...  At this time it appears we are 8-9 days away from a mid-cycle (4 month) low as the 4 month cycle tops.  So , currently it appears next week will be down with a bottom the following week near the end of March (28th??).  

GL traders

03/17/2014 - an interesting analog:

http://www.financialsense.com/sites/default/files/users/u163/images/2014/0314/11.jpg

http://www.financialsense.com/sites/default/files/users/u163/images/2014/0314/12.jpg

and another analog:

Mar 10, 2014 weekly outlook

As I mentioned last week the market seemed to be tracing out a 7.5-8 month cycle.  This past week seemed to follow that track.  Until the data says otherwise I will project using that.  Here is a longer term projection of this scenario:

Up close view:

GL traders

Mar 3, 2014 weekly outlook - where has the 9 month cycle gone?

The 9 month cycle is around 40 weeks (2 x 20 week cycle.  The actual cycle length according to some sources is 40.68 weeks.  Still many analysis refer to it as a 9 month cycle (2 Wall cycles).  Over the past few months it seems this 9 month cycle has not been there (even though in the past it and the 18 month cycle have been reliable).  Take a look:

So what do we (should we) do when the data fails to align to our expectations?  We examine the data in an attempt to determine what is the best fit for the data.  In doing that we hope out outlook will more closely match actual market activity.  I believe this more closely matches the current market action:

Why the variance from the traditional cycle length?  I am not sure, but FED actions may be having an effect.  I do expect the market will revert to the 20/40 week cycles, but in the meantime will look for 15/30 week cycles.  I advise all to be alert to this possible variance in the cycles.

GL traders

Feb 24, 2014 weekly outlook

Here is the latest visual --

Looks like the market will continue to churn the first part of the week.  SP500 may set new highs but I doubt we see any substantial upside breakout.  Much the same type of action we saw this past week.  Not exactly as I expected - up/down/up/down with no clear direction established.  It appears though we are establishing a top, but then again it could be a base I suppose.... The longer cycles are down, but shorter cycles are up which explains my expectation of churning action.

GL traders

Week of Feb17, 2014 outlook

Completely off target last week....

Looks like short cycle top during week, but 24 day cycle (1/4 Wall)  remains up.  Wall cycle and 1/2 wall cycle down. So up for 2 days then down..

Even though we saw a buy the dip reflex  in 2014 it seems we have seen or should see a top soon.  We had a sideways move with fairly even spaced tops followed by an upside breakout.  This happened in 1929, 1937, 1987,  2000 and 2007.  Here is a visual for your consideration showing 2013 sideways and upside breakout:

GL traders

Feb 10, 2014 weekly outlook

Well, I was right about a couple of up days.  I was doing OK on   the down bias until Friday.  My target of 1745 wasn't off by much  and market did not spend a lot of time below that level.  Not a perfect call of the market, but not a bad call either.

Appears a short cycle (12 days) provided the bounce off the bottom.  That cycle should have spent its upside energy by Wednesday.  Then we will have the Kitchin, 1/3 Kitchin cycle, Wall cycle, and 1/4 wall cycle will be down. by mid week the 1/8 Wall (12 day) cycle will be down.

So we may get some upside (baiting the bulls?) and then some vigorous down the last couple of days of the week.  I expect the week to be down (and it could be substantial).  Eventually I think we test the 1695-1700 area based on some longer term DPOs (but not just yet)

Here is a visual:

GL traders

02/12 updated chart:

==

The shorter term Kress cycles - part 3

We have looked at 10, 12, 20, 24, 30, 40, 60, and 120 year cycles.  Even the shortest of these cycles is longer term than most of us would use for trading.  Still it is worth knowing the longer term context within which you are trading.

The last 4 cycles Kress incorporated within his studies of cycles are 2, 4, 6, and 8 year cycles.  2 and 8 are Fib numbers; 2x2 (or 4) and 2x3 (or 6) are multiples of fib numbers.  So the previously discussed Fib relationship holds. Some of you may use the shortest of these for trading - still though even 2 years is too long for Swing Trading (why I use the Kitchin and Wall cycles for swing trade discussion).  Otherwise I am totally agnostic as to which group of cycles you choose to follow.  I believe the discipline imposed by following a system (group) of cycles can improve your trading results and focuses the mind.  No system is perfect, but some are worthwhile if you make better trades and earn more for your efforts.

Here are the shorter cycles within the group of Kress cycles:

Clif Droke has written a book (just released) that discusses weekly cycles Kress used in his market analysis.  This is supposedly new information not formerly released by Kress.  But we can guess that the # of weeks are Fib multiples.  I am guessing 10 weeks (Half a Wall cycle), 20 weeks (Wall cycle),  60 weeks (1/3 Kitchin cycle), 40 months (Kitchin cycle), 120 months (10 yrs). If anyone has the new Droke book -- let me know.

GL traders, hope this discussion of Kress's cycles were worthwhile...

Update 2/5/2014:

http://www.safehaven.com/article/32664/re-visit-two-charts-you-can-trust

http://www.safehaven.com/article/32669/stocks-peak-one-year-after-bonds-history-set-to-repeat

Feb 3, 2014 weekly outlook

If you follow my posts you know in January I had been somewhat negative looking for some cycle tops during January.  My outlook was for a 4% or so correction in January (which we got).

It appears that the longer cycles I generally follow (Kitchin, 1/3 Kitchin, and Wall cycles) are down.  The shorter cycles (1/2 Wall and 1/4 Wall) are up.  With these cycles offsetting in the coming week we probably will see some up days mixed with some down days with a slight down bias for the week.  It now appears the longer cycles have assumed dominance.

Here is a visual:

Weekly view:

GL traders

update 2/5/2014 (Hurst cycle charts):

===========