Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
What UK CPI, RPI INFLATION Forecasts for General Election Result 2019 - 11th Dec 19
Gold ETF Holdings Surge… But Do They Actually Hold Gold? - 11th Dec 19
Gold, Silver Reversals, Lower Prices and Our Precious Profits - 11th Dec 19
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

Stock Market 90 Day Cycle Complete, Technical Warnings Signs Brewing!

Stock-Markets / Stock Markets 2010 Dec 07, 2010 - 09:30 AM GMT

By: Jim_Curry

Stock-Markets

Best Financial Markets Analysis ArticleIn a prior article from back in November, I pointed out that the technical indications favored that the 90-day time cycle was in topping range - and was thus due for a short-term peak in the markets. However, that top was not to be made prior to the April high of 1219.80 SPX CASH being taken out to the upside. Below is the chart from that article:


Back in November I noted that this 90-day cycle was likely to give way to the largest-percentage correction seen since coming off the late-August bottom. That is, most of the prior corrections had been in the range of about 2.3% off the top, and with that the coming decline with the 90-day cycle was expected to be greater than this amount.

More specifically, the statistical analysis of the 90-day downward phases in the past had suggested that this correction should be at least 7 trading days off the top - and would ideally decline 4.4% or better before bottoming out. The actual decline with this component ended up lasting exactly 7 days and 4.4% - a direct hit in terms of minimum statistical expectations.

At the time I pointed out that the correction with the 90-day cycle was only to be short-term in nature, as indicators such as the advance/decline line had confirmed the action - and thus were suggesting that any short-term decline would end up being followed by a push to higher highs on the following swing up. Here is how this 90-day cycle chart looks at the present time:

Also noted was a still-outstanding upside target from the 180-day cycle to the 1243.16 - 1286.36 region on the SPX. In other words, following a correction with the 90-day wave (i.e., 4.4% off the top or better), the following upward phase of this cycle was favored to give way to new highs for the larger swing - and, ideally, a move into this 180-day target zone.

What To Expect Now

Right now, the 90-day cycle is deemed to have bottomed at the 1173 level - and thus is pointing higher off the same. Ideally, this means that we are in the upward phase that will top the larger 180-day component, which is now approximately 110 trading days along from it's last bottom - which is the July, 2010 low of 1010.91 SPX CASH.

With the above said and noted, the primary focus for mid-term players should be on the 180-day wave, which, as noted above, has a current upside target to 1243.16 - 1286.36 SPX CASH - a target that was originally triggered back in October. This range is not only the upside target for this wave - but is also the favored range to complete the current upward phase of this same cycle. Here is what this 180-day component looks like right now:

In terms of time, the larger 180-day wave is favored to top between now and January of 2011. Traders should bear in mind that this is a large cycle - and thus has a wide average variance of when it could actually form it's peak. Even said, the 1243.16 - 1286.36 range is the favored zone for it to top out, and, if the SPX does move into this area in the days/weeks ahead, traders should be looking at technical indications to either exit (and/or scale-out of) mid-term longs. Alternately, the short side could be attempted - though you should also keep in mind that the larger trend (i.e., with the four-year cycle) is still deemed to be pointing upward for what could be many more months before it peaks!

Technical action

As noted several times in prior articles that I have written, the advance/decline line (chart, below) had yet to register a major divergence between itself and price action - something that we would expect to see on or well before the four-year time cycle actually tops; this has been true about 85% of the time in the past history of this larger cyclic component:


With that, the suggestion from the advance/decline line had been that higher highs for the larger swing would continue to materialize after shorter-term correction phases. That is, traders who are attempting to call a four-year cycle top before the advance/decline line actually diverges are attempting to do something that occurs less than 15% of the time.

Having said and noted the above, there are definite technical warning signs that are currently brewing - at least in regards to the near-term action.

That is, of particular note on the chart above is the action of the McClellan Summation index, which is shown in green. You can see that this particular indicator is going to be hard-pressed to make new highs for the larger swing - even though price is currently within earshot of doing the same.

This is important, as a divergence in the Summation index is normally seen at or near cyclic peaks - with many occurring at larger degree tops, such as with the 180-day cycle. In other words, the market is starting to skate on 'thin ice', at least as far as technicals are concerned. Having said that, it is always possible that normal bullish seasonality could override what the technicals are suggesting.

My basic rule of thumb is that the bigger the divergence in the McClellan Summation index (and/or, the longer that it is present), the larger the following correction will be. Rewind to the July bottom, which saw a good divergence between the Summation index and price at the time; the following rally was 120 points off that bottom into the August high. There was also a divergence at the April top, one that was not as pronounced in the indicator - though it did last a long period of time. It eventually gave way to the correction into the July 1, 2010 bottom.

For the bigger picture then, we have the advance/decline line still in OK shape, though the McClellan Summation index is looking like it is going to show a good divergence from price - a technical negative, if seen as the 180-day target is traded into.

The bottom line with all of the above is this: the SPX should make a move into the 180-day target in the days/weeks ahead. However, the technical indications are starting to suggest internal weakness - which is consistent with what we should expect to see as this larger cycle starts to roll over, ideally occurring some point between now and early-January, 2011. Once this cycle does turn down, then once again we will be set up for the largest percentage correction seen since coming off the late-August low, a correction that is likely to be in the range of 7-10% off the top before bottoming out. More on all of the above as we continue to move forward in the cyclic configuration.

By Jim Curry
Market Turns Advisory
email: jcurry@cycle-wave.com
website: http://cyclewave.homestead.com

Jim Curry is the editor and publisher of Market Turns advisory, which specializes in using cyclical analysis to time the markets. To be added to our mailing list click HERE

Disclaimer - The financial markets are risky. Investing is risky. Past performance does not guarantee future performance. The foregoing has been prepared solely
for informational purposes and is not a solicitation, or an offer to buy or sell any security. Opinions are based on historical research and data believed reliable,
but there is no guarantee that future results will be profitable. The methods used to form opinions are highly probable and as you follow them for some time you
can gain confidence in them. The market can and will do the unexpected, use the sell stops provided to assist in risk avoidance. Not responsible for errors or
omissions. Copyright 1998-2010, Jim Curry

JIm Curry Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules