Saturday 26 May 2012

Weekend Update'1 - Weekly Index Cycles

A moderate rally in the markets this week, but it was nothing too significant. The closing candle on all the indexes was somewhat off the highs, 'inconclusive' is arguably how we should term this week.

IWM (representing Rus'2000 small cap)

IWM climbed a reasonable 2.5% this week, yet the downtrend remains STRONG. There is nothing to suggest this down cycle is coming to an end yet. Only a bounce over 78, preferably 80 (>10MA) would make me bullish on this index - and the wider market.

The primary downside target remains around 72/70 - the lows from last December.

Nasdaq Comp'


NYSE Comp'


Much like IWM, the SP' put in a moderate rally, but the main trend remains down. All trend indicators are still warning of further losses. There is nothing bullish here, at least yet.

Primary downside target is 1280/70, the weekly chart offers a 'doom' level target of 1160. The latter seems unlikely until late June/early July. That could very well be the end of the down move this summer - 'if' the Bernanke and other Central banks start up the printers again.


I still think the break below the 5000 level was the most important trading indicator so far this year. The Tranports did get a strong bounce this week, but it was not enough to claw back the previous weeks losses.


Despite this past weeks gain, the primary downtrend continues. It is of course easily possible the rally will continue next week. However, the daily cycle presents bear flags, and the 60min cycle is suggesting Tuesday will open lower - with a chance at breaking 1300 and then 1292 by Wednesday.

If we manage to get below 1292 by midweek, then its possible the bears can go on the rampage, and make a play for much lower target levels. As noted many times recently, the most bizarre aspect of what was at least a sixteen day down cycle, there were no panic days, and no sign of capitulation.  Maybe we'll get that towards the end of next week?

Best guess right now, a move down to at least sp'1280.

Looking ahead....

We have a VERY busy (but condensed 4 day) week ahead,  key econ-data includes both GDP (second 'guess'), and the big monthly jobs data. Further, we'll be one week closer to the Greek elections - attempt '2. I'm highly doubtful the market will be pleased with the outcome of that in mid June.

Later on Sunday, an update on the most important cycle of all...the monthly index cycle.

Daily Cycle Update - Bear Flags all over

A relatively weak market bounce this week for the bulls of +1.7%. The daily charts are presenting very clear bear flags on all indexes, and are suggestive of much lower levels by the end of next week.


Nasdaq Comp






All indexes are presenting classic bear flags (pink). It would appear the market is attempting/coiling up for a move to the lows from last December - aka, SP'1225/00. I suppose thats feasible by the end of next week if we finally see at least 2 major capitulation days (SP -35/40pts), and where the VIX can break into the low 30s.

The good thing for those with 'serious money', the stop levels are very clear... Bulls 1290/1300.....  Bears...1325/30. There can be no excuses for anyone next week.

Well thats it for today and this week. Across the 3 day weekend, I'll post the usual updates on both the weekly and monthly US index cycles.

Enjoy the long weekend!