Tuesday 22 May 2012

Daily Cycle Update

It appears the market has floored on the daily cycle at the secondary support level of sp'1292, and we are beginning some degree of an up-cycle. The move lower in the VIX today likely confirms this viewpoint.


IWM daily, bearish outlook



NASDAQ Comp



Dow



Sp, bullish outlook



Transports


Summary

The above selection are a real mixture of outlooks. I'm trying to keep a very open mind as to what happens in the coming few weeks. The bounce/rally, could easily just be a minor wave'2 UP, before a collapse wave in June.

It will be imperative for short term traders to watch for the market getting stuck at either 1340, 1370/80..and whether it can break above 1295. A move over 1422 would doubtless dismay the bears, and lure in another large number of permabulls.


My best guess?

I defer to the monthly charts when I'm unsure, and monthly charts say 'sp'1100s this year'. As I noted this past weekend, it is even viable we get new highs briefly in June, before quickly falling back - aka, the 'ultimate mind-frak for traders'.

Right now, my best guess would be we move up to that big resistance area of sp'1380. That would make for a strong minor wave'2 UP of 7%, and if we do rollover at that level, a swift and severe collapse to the sp'1150/00 level would occur in the span of 2-4 weeks, no later than early July.

For the moment, I remain in an underwater long position, looking to exit around 1340..where I will reassess.