Trade the Cycles

Tuesday, December 15, 2009

.........SPX Filled Two Gaps/Magnets Today

SPX (S & P 500, http://bit.ly/i0nsT) filled two gaps/magnets today, the 1114.11 upside gap from the open, and, the 1106.41 downside gap from yesterday 12-14-09's open, see the five day intraday candlestick chart at http://bit.ly/3qGxf3:, and, see the daily candlestick chart http://bit.ly/i0nsT.

SPX
(S & P 500, http://bit.ly/i0nsT) peaked right at the 1114.11 upside gap today, and, shortly before session's end, SPX bounced very soon after filling the 1106.41 downside gap from yesterday 12-14-09's open, and, it looks like SPX will bounce very early tomorrow 12-16-09, see the intraday candlestick chart at http://bit.ly/12SpXH. SPX 1110.76 would be a 0.618 Fibonacci retrace of today's -8.76 point intraday decline, see five day intraday candlestick chart at http://bit.ly/3qGxf3. Gaps have a strong tendency to provide a trading roadmap.

Much of the time, probably 90%+ of the time, one should exit a very short term SPX trade very soon after a gap gets filled. SPX has a strong tendency to change direction (very short term cycle turn down or up)
very soon after a gap gets filled.
Longer cycles tend to fill a series of gaps. Market cycles can largely be viewed as gap filling actions, that reliably follow Elliott Wave patterns.

SPX (S & P 500, http://bit.ly/i0nsT) volume spiked about +27% yesterday 12-14-09 (3.867 billion shares) vs 12-11-09's volume (very light 3.053 billion shares), which pointed to peaking action.

SPX
(S & P 500, http://bit.ly/i0nsT) volume today 12-15-09 picked up dramatically again, to 4.310 billion shares vs 3.867 billion shares yesterday/on 12-14-09, which is a bearish two day volume spike of 41.17%. It looks like the big money was exiting the past two days, as also occurred on 12-3-09 and 12-4-09.

SPX's (S & P 500, http://bit.ly/i0nsT) 2 day nearly 66% volume spike from 12-2-09 to 12-4-09 correctly pointed to Friday 12-4-09 being an important cycle high/1119.13.

SPX's (S & P 500, http://bit.ly/i0nsT) Short Term Upcycle since 12-9-09 probably peaked yesterday 12-14-09, see the five day intraday candlestick chart at http://bit.ly/3qGxf3:, and, see the daily candlestick chart http://bit.ly/i0nsT.

It looks like SPX (S & P 500, http://bit.ly/i0nsT) will probably fill 12-10-09's 1095.95 downside gap/magnet (from the open) on Wednesday or Thursday (also keep in mind the 1069.30 downside gap/magnet).

SPX
(S & P 500, http://bit.ly/i0nsT), not surprisingly, tested/approached the 1119.13 12-4-09 cycle high, in Wave 5 up of the upcycle since very early Wednesday 12-9-09, see the five day chart http://bit.ly/3qGxf3:. Based on the nature of cycles, if SPX (S & P 500, http://bit.ly/i0nsT) put in an important cycle high at 1119.13 on 12-4-09, then, SPX should put in a cycle high close to 1119.13, such that the downcycle's trend begins very flat.

SPX (S & P 500, http://bit.ly/i0nsT) has been extremely flat the past month, see http://bit.ly/i0nsT, which looks like important peaking action, the Major Upcycle since 3-6-09 is probably peaking.

Exxon Mobil (XOM), by far the largest component of the heavily market cap weighted SPX/S & P 500 (3%+), experienced a mini crash yesterday, creating a huge bearish breakaway upside gap at the open, see http://bit.ly/4B2JAq. Obviously, an important development.

Also, see NDX's (
NASDAQ 100) bearish five day intraday chart, with it's Short Term Upcycle since 12-9-09 having rolled over "very dramatically" yesterday, putting in a very bearish triple top (Friday and Monday) on the five day intraday chart, and, it obviously looks like NDX is leading SPX to the downside, see http://bit.ly/6Rq66e.

See the Trade the Cycles system and tools/indicators rigorously applied at Twitter, see http://twitter.com/tradethecycles. It's easy to join, then all you have to do is click follow, or, you can simply follow my Twitter web site at http://twitter.com/tradethecycles.

The five day SPX vs broad market Lead Indicator Walmart (WMT) chart at http://bit.ly/4t6GS9 is in very bearish territory, since WMT's leading to the downside by -1.00% to -1.99%.

The five day intraday broad market Walmart (WMT) Lead Indicator (includes HUI for gold bugs) closed at very bearish today (-1.00% to -1.99% vs SPX), see http://bit.ly/5zScR (cycles, Elliott Wave patterns, and gaps are the primary market timing considerations, indicators must be evaluated AFTER understanding the cycles, Elliott Wave patterns, and gaps), and, the daily absolute Walmart (WMT) Lead Indicator closed at a modestly bullish +0.38% vs SPX today 12-15-09.

The intraday broad market Walmart (WMT) Lead Indicator points to SPX strength early tomorrow/Wednesday (WMT looks like it will rise very early on, based on it's intraday chart), because, it's in modestly bullish territory (+0.25% to +0.49% vs SPX), see http://bit.ly/4vMVz5 (cycles are primary, an indication is secondary).

The intraday SPX Wall of Worry (SPX vs VIX) rose very sharply today 12-15-09, which is a very bullish indication for early tomorrow/Wednesday
, see http://bit.ly/UTZwc.

The five day intraday SPX Wall of Worry (SPX vs VIX) crashed dramatically from very early Wednesday 12-9-09 to late yesterday 12-14-09, which is an extremely bearish indication (SPX trended down since mid session yesterday), because, it was a huge rise in complacency, see http://bit.ly/vryF4.

VIX was up +1.61% vs SPX down -0.55% today, which is a bullish indication for early Wednesday 12-16-09, because, it's a +1.06% rise in fear/+1.06% rise in the SPX Wall of Worry (SPX vs VIX) today, so, strength is likely early on Wednesday.

Normally an unusually large rise complacency points to significant strength (is the non contrarian case, since complacency usually points to weakness, is normally contrarian), while an unusually large rise in fear points to weakness (fear normally points to strength).

Market breadth was/closed at bearish today (NYSE up vs down volume is/appears to be correct), which is normally a bearish indication for early Wednesday, see http://bit.ly/lPIyW, but, it's probably already reflected in today's weakness (was bearish or mixed most/all of the session, so, it was a great indicator as usual). Cycles/Elliott Wave patterns/gaps are the primary considerations, and, SPX might have peaked at 1119.13 very early on Friday 12-4-09, see the five day intraday candlestick chart at http://bit.ly/3qGxf3.

Much of the time SPX is simply engaged in gap filling action. When a
gap/magnet gets filled, look for a session cycle high or a session cycle low to probably occur shortly thereafter (timewise and usually also pricewise). We've seen many times in the past few weeks that a session cycle high or low has occurred very soon after a gap got filled.

Often important and even not so important cycle highs or lows occur shortly after (both timewise and pricewise) gap filling action is completed.

Nothing discussed on this Blog is a recommendation, or, should be construed as investment advice.

Fed Credit fell a substantial -$19.268 Billion in the five day period ending 12-9-09, which is a bearish indication (once the upcycle since very early 12-9-09 peaks; it probably did peak on 12-14-09), see http://bit.ly/Ys2ds..

Fed Credit contracted a significant -$2.759 Billion in the five day period ending 12-2-09, see http://bit.ly/Ys2ds.

Fed Credit fell a significant -$1.552 Billion in the five day period ending 11-25-09, see http://bit.ly/Ys2ds.

Fed Credit rose a massive $75.680 Billion in the five day period ending 11-18-09. This was another successful attempt by Space Shuttle Bernanke to prop up the market for a while.

An SPX (S & P 500, http://bit.ly/i0nsT) major cycle high (cycle began 3-6-09) might have occurred at 1119.13 on Friday 12-4-09, see http://bit.ly/i0nsT. Note the bearish short white (close above the open) candle with a medium spike on Friday 12-4-09, and, that SPX has made very little upside progress in recent weeks (less than 6 points peak to peak since 11-16-09), it has rolled over dramatically.

SPX's (S & P 500, http://bit.ly/i0nsT) volume increased dramatically again on Friday 12-4-09, like it did on Thursday 12-3-09 (see volume bars at http://bit.ly/i0nsT), rising +23.78% (two day rise of nearly 66%) to 5.133 billion shares from 4.147 billion shares on 12-3-09 from only 3.135 billion shares on 12-2-09, which jives with Friday probably being at least an important Short Term Cycle High, if not also a very important Major Cycle High (cycle began 3-6-09). A dramatic volume spike tends to occur at/very near an important cycle high or low, for all cycle timeframes.

NDX (NASDAQ 100) looks like it might have peaked (major cycle high, NOTE that the upcycle began in November 2008) at 1815.60 on Friday 12-4-09, see http://bit.ly/73BXOt, rolling over dramatically/bearish double top with the 1814.25 cycle high on 11-16-09.

"The market" basically probably peaked in September, when RUT/Russell 2000 (http://bit.ly/2UFqrk) and DJUSRE/Real Estate (http://bit.ly/4EmXGG) probably peaked on 9-23-09 and 9-17-09, and, when a dramatic multi day market volume spike occurred (6 billion shares area), see the volume bars at the bottom of http://bit.ly/i0nsT, confirming that important peaking action was probably occurring.

As discussed previously, SPX (S & P 500, http://bit.ly/i0nsT) is heavily market cap weighted, with 4% of the components (20) accounting for nearly 33% of the movement, and, with less than 10% of the components (47) accounting for slightly over 50% of the movement.

Much of the SPX
(S & P 500, http://bit.ly/i0nsT) strength in recent months has been due to a relatively small number of large cap giants like XOM/Exxon (accounts for over 3% of SPX's movements, which is by far the largest weighting) and GOOG/Google doing well.

Chart one at http://bit.ly/18T7lw shows SPX's (S & P 500, http://bit.ly/i0nsT) Elliott Wave count since 3-6-09, which suggests that the Major Intermediate Term Upcycle since 3-6-09 is/was peaking.

Keep in mind that 5%+ follow through
must occur (for a major upcycle sell signal), after breaking the uptrend line since 3-6-09, before the Trade the Cycles system indicates that SPX has very likely peaked.


.......http://www.JoeFRocks.com/

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