July 28, 2014 weekly outlook

Overall earnings have looked good, revenues less good...  So far, the market has not responded much to these earnings.  Yes, SPX has set (barely) new highs.  But, the "M" pattern did not develop this past week, but the right leg may still develop over the next couple of days.  See for yourself:

Update 7/30 - With today's GDP report we have had considerable inventory build over the past 3 qtrs (around $200B).   The Kitchin cycle (a longer cycle of around 3.5 years) is sometimes referred to as the inventory cycle.  Once companies get too much inventory they slow down purchases because carrying inventory too long is expensive...  This pullback can lead to a stock market correction.  Here is a visual presentation:

GL traders

July 21, 2014 weekly outlook

Sometimes it helps to look at recent past activity to get an idea of what is happening and the likely future  market.  Here goes:

 

A double top forming an "M" is a fairly common pattern and is formed as shown above.  All inputs considered if the "M" is well formed (not slanted) with even tops and legs what can we conclude?

In the above chart we see the 10 TD cycle contributing most to the pattern. We can conclude that all cycles longer than the 10TD and 20 TD are cancelling each other out.  This cancelling effect generally happens when a trend reversal is in the process of setting up.  So if the pattern completes (right leg down next week) we are looking at an intermediate length trend reversal (possibly)????

July 14, 2014 weekly outlook

The week ahead:

- short term 10TD cycle should bottom  along with 20TD cycle mid week (WED +/- 1 day.  Probably no more than 1% downside over next 2-3 days.

Warren Buffett's favorite measure of over valuation is when the value of the total market index exceeds the GDP.  We have reached that level, so maybe just a matter of  when the market corrects?

GL traders

Update 07/16:

Update 7/17:

July 20 is this Sunday which means if the 2009 bull market top wasn't already seen on 7/3/14 then it should be expected this week.

http://www.safehaven.com/article/34527/lindsay-the-2011-basic-advance

July 7, 2014 weekly outlook

 For the week:

 

Appears 20 TD (1 month cycle) down, and 10 TD (2 week cycle) down...  Longer cycles (15 month, 7.5 month, 3.875 month) cycles down.  The 40 TD (2 month) cycle is up.  Should give us up to 2 weeks down (3%?).

Jul 1, 2014 second half outlook

.............
Normally I look at the market 1-2 weeks ahead (because that is where the normal swing trade takes place).  I took  a long term look early in 2014 (a year ahead and then some very long term charts).

It is time to take a look at the second half of the year.   A 15 month cycle bottomed late June 2013.  So it should bottom again in late Sept along with the 7.5 month cycle and 3.75 month cycle.  Based on the bottom amplitude in late June 2013 I expect the bottom to result in more than 5% pullback (Maybe even a correction (over 10%)).

Currently the market is past the mid-point of the 15 month and 7.5 month cycles resulting in right translation.  This implies considerable downside pressure from these cycles into 3rd week of September.  So I expect the upside from shorter cycles to be greatly neutralized for the next several weeks.

I will try to keep you updated weekly.

GL traders.

http://static.safehaven.com/authors/readtheticker/34365_b_large.png

June 30, 2014 weekly outlook

The longer cycle is well past its mid-point and has become right translated.  This should lead to substantial downside pressure during July. This week you have 2 cycles down, one near expected top by end of week and the shortest cycle up.  This should give some downside during the 4 trading days this week.  probably around 1% for the week.

Jun 23, 2014 weekly outlook

To understand cycle translation you first have to determine the  length of the cycle. Let's examine  an intermediate length cycle in the stock market.  That cycle is around 20-24 weeks trough to trough (wall cycle?). The median being 22 weeks. If we divide 22 weeks by 2 we get 11 weeks. That is an point at which there is no translation. It is the dividing point between a left translated and right translated cycle.

Any cycle that tops on week 12 or later is right translated, Right translated cycles are the found in bull markets. In other words - cycles spend more than 50% of the time advancing (bull market).

In a bull market an intermediate degree correction is a profit-taking event, and that's all it is. The talking heads on CNBC or Bloomberg  will find some  reason for why the market is correcting but the market has just moved higher long enough that a corrective move to consolidate the gains takes place. Bull markets are made up of multiple right translated medium length cycles.

Left translated cycles, are featured by markets that are in trouble. A left translated cycle is a sign that the market/economics are broken, or in the process of breaking. A left translated cycle is not a profit-taking event. A left translated cycle is a sign to short the market or stay on the sidelines.

So based on this we should see right translated cycles since early 2012.  Let's take a look:

Notice we are late in a cycle and appear to be at/near a right translated top.  Looking at a daily chart we see the medium term cycle is now past its mid point and if it were uniform neither right or left translated) it would have already turned down.  of the other shorter cycles - one is up, one is down and one is topping (sideways).

If the right translated cycle is at a top then we should see a down bias in the market this week.  So best guess is down 1 1/2% or so for the week with possibly minor upside Monday.

GL traders

Week of June 16, 2014 outlook

Appears that the pullback that started Wednesday should continue for 7-8 trading days as the pullback  continues.  The low  should be under 1900.  Here is a visual:

If we overlay fibs on a time basis (0, 1, 2, 3, 5, 8, 13, 21, 34. ...) we see confirmation of a low in about 8 days:

GL traders

Week of jun 09,2014

 

 

 
 




























Two shorter cycle down (1 month, 7.5 month) and two cycles up (3.75 month and 1.875 month).  Normally gives us a range bound up/down 1% or s
Have we topped?

 

Outlook Week of Jun 2, 2014

Some cycles up, some down. some sideways.  One topping.  Action for the week is somewhat confusing from the cycles, but we will try!!!  Expect early week to  hold up and move sideways, but by Wednesday we should see some pullback in the market.

Here is a visual:

GL traders