Sunday, September 05, 2010

SPX LT Oscillator - Close but no cigar !

Here's a long term Oscillator, which i have been showing on this blog for many years to track the LT turns. Well, since my system on SPX is proprietary, i cannot display any of my trading charts. So I decided to at least post this long term Oscillator for the benefit of those who are into LT investing. This Oscillator is not of much use to a trader as much as for an investor. But it certainly can be indicator to demarcate bull and bear markets.

The rules are pretty simple.

1) For a bear market, we need to have a lower high and lower low on the weekly price charts and the Oscillator has to cross below zero.

2) For a bull market, we need to have a higher low and higher high on the weekly price charts and an oscillator crossover above zero

This week, the market was on the brink of a LT breakdown, but escaped marginally. What the LT bears would not like to see here is a curl up of this MACD above the signal line, which would give back control to the bulls.

In my last post, i had said that the strong rejection from 1130 pretty much nailed the 9 month cycle top. Now the failure to break the SPX 1010 lows and a strong rejection from there pretty much neutralizes the situation. In other words, we are back to square one. My guess is we will double top around the SPX 1130 area and start the next leg down into the 9 month bottom lows due late Oct. But that's just a guess at this point. In a week or two, the market should start giving additional clues.

Good luck trading !