This past week, the bears needed to see a clear turn on the weekly index cycles. Even though Friday closed somewhat higher, the closing candle for this week was still more than enough to confirm the completion of wave'2.
The following six index charts should put beyond any doubt, what is coming in the weeks ahead. In particular, check the NYSE composite, it is without question the most perfect fail candle I've seen on any index chart.
IWM closed just a touch under the 10MA, a close in the 75s next week will confirm the top..and that should open up 70..and eventually 65/63, possible 61/60. The past 5 weeks of trading is one giant bear flag.
A nice red candle on the dow, a move next week <12400 should confirm the bear flag..and lead to a break of the big 12k level within 2-3 weeks.
The NYSE composite, aka ' the master index' as I like to call it. It is a better representation of the overall capital markets than anything out there. We have a PERFECT fail at the old support (now resistance) level of 7800. Absolute chart perfection!
The NYSE comp' is now set to fall to 7400, which should in itself confirm the bear flag, and then a break to new lows, first target would be around 7100/6900 - around 8-10% away*
*this would equate to sp'1225/00 - which indeed is exactly my next target zone.
The Sp' put in a superb bearish candle this week, a nice spiky tail/shadow on the top, and the close under the 10MA is a most welcome thing to see.
A move under 1300 within days seems VERY likely, and that will confirm the bear flag. The next stop will then be 1225/00. Mid-term target (as based on monthly cycle) remains sp'1150/00.
The transports was the strongest index earlier this week..but like everything else...closed weak. The near hyper-ramp Mon-Wed, failed dramatically - with a further 0.5% fall on Friday.
The tranny is set to break the big 5000 level this coming week..and that should eventually lead to a summer 2012 target of at least 4500/4400 or so. The monthly 'doom' chart suggest 3500 is viable.later this year..which would be a provisional warning of dow <10k.
A very important week, and one that can be claimed as an important victory for the bears.
All cycles are NOW bearish. I remain confident the bigger sp'1150/00 target will be hit by late July/August. For me, the only issue is how well can I trade in/out of these smaller cycles -trying to capture as many downside points as possible, its not going to be easy, but I'll sure give it a try.
What about next week?
I am expecting significant downside across Mon/Tuesday. We should have a fair chance at hitting 1305 at least, possibly 1290s. I'd exit there, and look for another re-short 10/15pts higher.
There is a small hint in some of the charts - especially with Oil/metals, that sp' could snap dramatically lower to 1225 by this coming Friday. That would make for a superb place to close out short positions, ahead of the July'4 holiday week.
More on that theory, this Sunday night.