Saturday 14 July 2012

Transports - which way?

The transports, aka..the 'old leader', remains stuck in a tight range. The first monthly close outside of the trading range will be a key indication for the broader market. There are small hints that the eventual direction will be to the downside.

Transports, monthly, 6yr

Transports, weekly


Bulls need a clear break over 5400, bears need a monthly closing under 5000.

Small hints of weakness? Well, the two previous months did show brief punctures below the 5k level, and June put in both a lower low, and a lower high.

Downside targets

First target is around 4500/4000
The 'doomer' target would be 3500, which is a huge 30% lower, probably equating to at least sp'1000,  I am not expecting the latter right now, primarily due to the Bernanke 'likely' to do QE3 at some point this year.

More on Sunday

Late Night Doom..for the weekend

To end the week...lets close with a reminder on the broader doomster outlook. There remain many unknowns in this outlook. Not least of which is 'will there be 3 waves down..or 5', and 'when will the printing maniac appear?'.



The primary target remains the sp'1150/00 zone, as based on the big picture monthly cycle charts.

Whether that final low is achieved in August..or takes until October is very hard to guess. Much will be dependent upon the actions of the Fed. The Fed though is always reactive, they NEVER pre-empt, so I'm inclined to believe there will NOT be QE3 at the next FOMC - Wed' August'1st.

Then there is the issue of whether sp'1100s will be the floor for the 2012, or if some 'scary downside' is ahead in October/November.  If the market is destined to collapse later this year, then I'd guess we'll see no sign of the Bernanke until after the down cycle is completed, when ever that might be.

A good week ahead

I am very pleased with this week, it is good to be on the sidelines across the weekend, and I will be looking for a major re-short sometime next week - maybe as early as Tuesday.

Have a good weekend....I'll do a weekly cycle update later on Saturday.

Goodnight from a rainy London 

Daily Index Cycle update

Today's ramp in the indexes was stronger than I had expected, but I am fine with that. Let the bull maniacs ramp the market, we'll likely see the indexes max out and rollover sometime after next Tuesday.

Lets take a brief look at how the main six indexes closed the week....

IWM (representing rus'2000)

Nasdaq Comp






The sp' chart best outlines my outlook.

There are two broad outlooks - both bearish for late July/August

1. We make one final higher high >1374..and then start the first tiny wave of main wave'3
2. We make our first lower high <1374..and that would probably mean the recent decline was minor wave'1 of 3, and that minor wave'2 of 3 is also complete, with the destruction wave'3 then due to begin.

Regardless of which scenario will be correct, I am very bearish for the next 3-5 weeks.

At a minimum I am seeking sp'1225/00, no later than mid-August
Best bear case...sp'1170/50 -as based on daily fib' charts, and monthly index cycle outlooks
I would only be concerned that the bigger bearish outlook is in doubt, if we break over 1390. Clearly, and move over 1422 will violate ALL bearish outlooks. It really is that simple.

A little more later...