Weekly Index Cycles - mid-term doom still ahead

With main wave'1 having completed (see daily cycle charts), some are suggesting the market has put in a floor for the months ahead.  However, the bigger monthly cycle is paramount to keep in mind, and after another week or so of upside, this market is set to break the recent sp'1266 low.


IWM (representing the rus'2000 small cap)

IWM certainly had a reasonable up week of +4%. Yet IWM could not break/hold over 85 this year, and I doubt it will break 85 for a very long time to come. The current upside target is around 79/80. Only a break over 81.50 would be a problem for the larger bearish outlook.


Nasdaq comp

Dow

I can't imagine the dow breaking new highs in the near term. There are some out there touting dow back in the 13300/500 range...I don't think so. I'm looking for a bounce to around 12750/850..and then a new wave'3 lower.


NYSE comp

Sp

Sp'1370 will be very strong resistance level in the coming week, although I think there is an equally large problem for the bulls around 1350/60. The descending line (grey) will be 1400 in the coming week, I can't imagine a move over there at any point.


Transports

The old leader has been stuck for months, and remains a huge warning that there are very serious problems ahead. We're back above the big 5000 level, but I'm sure we'll close the month under it.


Summary

The bull maniacs are very relieved this weekend, and are again touting new highs of sp'>1422 in the months ahead. The Fed are going to do more QE, and Europe will be magically fixed too with more bailout/LTRO money, right? Err, no.

So many sell signals triggered in May, all we are seeing right now is a pretty standard strong wave'2 up. Considering that wave'1 took 5 weeks, it would be very reasonable to expect that wave'2 will take around 2-3 weeks. Very much the '2 steps down, 1 step up' style of market trend.

For those who can keep the bigger monthly cycle in mind, a further 2/3% rise in the indexes this coming week will merely provide for more ideal shorting opportunities.

*If you haven't already read it, I highly recommend you check my previous posting on the VIX, it will help put the past weeks gains into perspective.

So, to be clear, my sp' target for the coming week is 1350/60, which would equate VIX in the 18s. I believe it is very possible wave'2 will complete by the end of next week.

Good wishes