Saturday, August 23, 2008

9 month cycle bottom

I am not a cycles guy and i don't watch short-term cycles. But i do pay attention to the 40 week-cycle, i.e the 9 month cycle. One of the most powerful and reliable cycles IMO.

Ideally the cycle is due the end of Septempber. If it right translates, the way it did the last time, then it's due end of Oct to first week of Nov.

There are wide range of opinions concerning the LT scenario. Opinions range from a dark bear breaking the Oct 02 lows to a LT bull which has already resumed. Some remain in the middle camp which are calling for a cyclical bear. I continue to remain in the middle camp i.e a primary degree wave 2 from the Oct 07 top (Wave 1 being the primary 1 from oct 02 - oct 07).

The coming 9 cycle bottom would give more clues about the intermediate picture. Ideally we should break below SPX 1200 and put the necessary divergences on the weekly to end the primary degree wave A of 2 and start the primary degree wave B of 2.

On the other hand, if the 9 month cycle lows hold above SPX 1200, then it would mean that the primary degree wave A of 2 terminated at SPX 1200 and we are already in a primary degree wave B.

The coming 9 month bottom will provide strong clues about the IT scenario and put to rest all opinions, as the market will once again assert itself, leaving behind all opinions in the dust !

Wednesday, August 20, 2008

Weekly Trends - Aug 20, 08

Gold and Dollar - My call on July 27 was spot on. Gold plunged below $800 and Dollar tagged the 77-78 area. Now Gold and Dollar are at key LT pivot points. If the bull market in Gold is alive we should start a screaming rally and take out the March 08 highs. That would be the expectation of a trend follower. However, given the concerted co-ordinated efforts among the central banks across the world to combat inflation (many of the asian bloc countries already in a run-away inflation mode), it's possible that the inflation cycle has peaked and so has the commodity bull cycle. That's just my opinion. I will let the market speak for itself.


Nothing has changed since my July 21 update. We were at 1260 then and we are around the same levels today. SPX probably topped at 1313. If not, there are two key resitances overhead - 1327, which is the May 06 highs and the 200 SMA, currently around 1365. 1365 also happens to be a key horizontal res (March 07 and Aug 07) bottoms.

As far as the daily charts goes, it's a tough choppy market to trade here. It's the hourly charts where the action is. How do i play this? To me, it's simple. Currently the daily momentum is down. So keep shorting the bounces on the hourly charts. If the daily momentum turns up, keep buying the dips until either 1327 or 1365 is reached.

Good luck.