Midweek Market Update
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Entries by Bob Loukas
Distant Rumbling
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Buy on Cannons
Is the Syrian rhetoric really to blame for this more than expected weakness, I highly doubt it. In fact I can barely keep a straight face thinking how ludicrous the idea that potentially striking Syria is bringing the equity markets down. The simple fact is that this is weaker than expected action for a 1st Cycle Low decline and there appears to be some significant distribution occurring in this market now. I firmly believe that the more dominant weekly and monthly Cycles are topping out here, but one should not expect the equity markets to simply roll-over. We’re still seeing a massive influx of retail and margin debt capital which will continue to sustain these markets for the immediate future.
For time being though sentiment has reached fairly extreme (negative) levels and the Cycle has stretched to 46 Days (Average is 38 to 42 days). Based on the recovery this morning and now a confirmed Daily Swing Low we have to assume that we just left behind a slightly stretched (46 days) Cycle making this just Day 1 of a new Cycle.
Midweek Market Update
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Weekend Update
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Midweek Update
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Switching to Auto Pilot
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Laying Out Bear Traps
The Bollinger Bands on the S&P are as tight as I’ve ever seen and there is no doubt now that the Daily Cycle has topped. This being Day 37 (of an expected 40 day Cycle) this action is certainly part of a decline down towards a Cycle Low. But the problem (for bears) is that the S&P isn’t dropping in price! I will grant you that the chart is looking a little “toppy” here, but at the same time the bears have unsuccessfully tried to roll this market over for 17 sessions now. You will notice that from a technical and detrended price standpoint this Cycle is well and truly approaching DCL levels.
Midweek Market Update Report
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Gold is Following Through
This post is a small excerpt from the weekend Financial Tap member report.
Gold spent 11 sessions moving lower from the top of the Cycle, giving back 6% of the gains. Judging by the blogosphere reaction during that decline I get the impression that very few people believed in this Cycle. From what I can tell a majority expected gold to once again rollover in a steep decline. That’s just the problem with bear markets; they scar us to the point where we can’t fully embrace potential when we see it.
As the longs started bailing out in fear and the bears gained confidence again, gold come out with a 2 session $40 pop. In its wake gold confirmed an end to the 1st Daily Cycle that in retrospect turned out to be a bullish Cycle. From the table below we see that 1st Daily Cycles (excludes bear market Cycles) top on average after gaining 10.6% in some 20 trading days. This daily cycle gained 14.3% to a top taking just 16 days. In the end it was a bullish 1st Daily Cycle which from a timing standpoint ran the expected 27 day average.
The surge out of the Cycle low regained back half of the prior Cycle losses in just one session. By the close of Day 2 gold has regained the 10dma and closed above the declining Cycle trend-line, ending what has been a fairly textbook Cycle transition. In my opinion we’re still looking at a bullish Daily and Investor Cycle that have none of the characteristics matching the Cycles that haunted investors since last summer. What I expect now is for more follow through early next week with a quick move above $1,348 (current IC high). This next target will likely offer some resistance with a possible 2-5 session consolidation period.
