Stock Market Cyclic Turning Points– Current Market Outlook
Stock-Markets / Cycles Analysis May 19, 2008 - 12:16 PMBy: Jim_Curry
Short-term Outlook For the short-term, a minor cycle up was due to take the various indexes higher into approximately May 19 th , which was plus or minus a day in either direction. Once the next minor cycle peak is complete, then a retrace lower should be seen into around May 26 th , which is also plus or minus a day in either direction (chart 1). At minimum, that drop should take the index back to or below it's 9-day moving average, however there is still the potential that a larger drop could be seen, simply again based upon the extended position of the 45-day cycle. However, for this 45-day component to actually confirm a peak in place, an intraday push below the 1384.01 figure would now be needed, the new ‘reversal point' for this cycle.
For the short-term then, should the pattern of an early-week rally into resistance be seen, then traders would want to be looking for technical indications of a peak forming - one which should give way to lower prices into May 26 th , plus or minus a day. Resistance for the move is still first at the 200-day moving average for the SPX (around the 1427 level), and then the monthly projected resistance high of 1435, which is plus or minus a few points in either direction.
Mid-term Outlook
Stepping way back, the larger 360-day and four-year cycles bottomed at the March low, which confirmed several week's back with the weekly close above VTL-1 (chart 2). With that, there has been noted an inverse ‘head and shoulder' pattern on the daily/weekly chart of the SPX, a pattern which targets a test of the low-1500's (or higher) with the same. And, if this assessment is correct, then whatever declines that should develop with the smaller daily cycles in the weeks/months ahead should ideally mark buying opportunities - in the anticipation of the 1500's being hit anytime between now and year end.
Even with the above, the SPX could run into several problems this summer. The 45-day cycle is now very extended at 43 days along – and thus is due for it's normal correction off the top (chart 3). This cycle is due to low-out somewhere in the May 26 – June 9 timeframe. If and when this cycle does confirm a peak (right now this would require and intraday push below 1384.01 SPX CASH – but which should continue to move up in the days ahead), then again the normal expectation should be for a retrace back to, towards, or below the 45-day moving average on the next downward phase of the same.
This moving average is currently at the 1368-1369 level, but is moving up at about 2-3 points per day (chart 3). If and when we see a 45-day cycle correction play out going forward, then again traders would be wanting to look for technical indications to buy the market once again, as the next 45-day up phase should take the SPX back to or (ideally) above whatever high ends up forming on the current upward phase. In terms of time, the next 45-day
cycle peak (the one that follows the current rotation) should be seen somewhere in mid-to-late June, which would then lead to lead to yet another correction with the same into late-July or early-August, which is where the next 45-day and 120-day combo lows are currently set to occur. That low would not only end up as a 120-day bottom, but also as a 45-day cycle bottom as well. That 45/120 day combo low would then be expected to give way to a very strong rally into and after the November election - which also fits with normal seasonal patterns.
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 1998-2007, Jim Curry
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