ZeroHedge reports on the 4th Qtr. GDP release, “Less than an hour ago we speculated that "it wouldn't be surprising for GDP to come substantially weaker than expected, only to be revised higher (or lower) subsequently." Sure enough, we have gotten at least the first part right for now, with the advance Q1 GDP number printing a very disappointing 2.5%, on expectations of a 3.0% increase, up from 0.4% in Q4, and the biggest miss since Q3 2011. The reason for the big miss: Inventory and Fixed Investment came well below expectations, comprising 1.03% (of which autos represented 0.24%) and 0.53% of the 2.5% annualized increase GDP. Kiss the great CapEx investment story goodbye.”

Here is a Cyclical view of what has transpired since November 16 in Master Cycle B. I wish to point out that Master Cycle A has not completed yet and should bottom at the end of the upcoming decline.

SPX has completed a reversal pattern at Cycle Top resistance at 1588.53. It attempted a challenge of resistance yesterday, but closed beneath it. This morning’s Pre-market is down and I expect gravity to take over in price discovery…regardless the news.

You can see how regular the cycles are, both top-to-top and bottom-to-bottom. The two major divisors are 43/86 (Primary Cycle) and 30/60 (Trading Cycle) plus or minus 4 days. Based on this analysis, we may see the next market bottom on May 1, in a relatively extended Trading Cycle.

This may seem rather extreme, but it appears that liquidity has all but disappeared in the market. An economist who has a handle on this is Joseph Stuber, who wrote, “What Happens When Liquidity Disappears?” I think he accurately states the current condition of the market.

Regards,

Tony

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