Trade the Cycles

Friday, January 15, 2010

SPX's Upcycles Since 11-2-09 & 12-9-09 (EW 12345 Patterns) Might Have Peaked Yesterday 1-14-10

SPX's (S & P 500, http://bit.ly/i0nsT) Monthly Upcycle since 12-9-09 and Intermediate Term Upcycle since 11-2-09 might have peaked yesterday Thursday 1-14-10 at 1150.41, see the daily candlestick chart at http://bit.ly/i0nsT

SPX (S & P 500, http://bit.ly/i0nsT) put in a bearish double top the past week at 1149.74/1150.41, see http://bit.ly/i0nsT.

SPX
(S & P 500, http://bit.ly/i0nsT) has an Elliott Wave up down up down up pattern since 11-2-09 (Wave 1 peaked in early November with a spike, Wave 3 peaked early December with a spike, and, Wave 5's peaking/maybe on 1-14-10) and 12-9-09, see the daily candlestick chart at http://bit.ly/i0nsT

Follow me on Twitter, see http://twitter.com/tradethecycles.

Fed Credit was very light today and the market was weak, see http://bit.ly/wQNYC. Coincidence? Probably not, though SPX (S & P 500, http://bit.ly/i0nsT) was due to turn down cyclewise and it was OpEx (Options Expiration) day.

The fact that SPX (S & P 500, http://bit.ly/i0nsT) gapped down from 1148.46 at today's open, see the five day intraday candlestick chart at http://bit.ly/3qGxf3, then plunged significantly, without even trying to fill that gap, suggests that SPX will probably try to fill the downside gaps/magnets at 1115.10 and 1114.05 (possibly 1102.47 also) early next week.

The extremely bullish five day SPX vs Lead Indicator Walmart (WMT) chart at http://bit.ly/4t6GS9, since WMT's leading to the upside by +2.00% to +3.99%, points to early weakness tomorrow/Tuesday (usually a very short term bearish indication, also, the one day intraday chart's slightly bearish, see http://bit.ly/88OBwn), and, the very bearish SPX Wall of Worry today (late session substantial collapse/crash, though SPX was down -1.08% vs VIX up +1.59% today) points to early weakness on Tuesday, and, SPX's (S & P 500, http://bit.ly/i0nsT) intraday candlestick chart points to early weakness tomorrow/Tuesday (intraday Elliott Wave 12345 bounce peaking/peaked), see http://bit.ly/12SpXH, and, see the five day intraday candlestick chart at http://bit.ly/3qGxf3.

Trading Roadmap: WATCH (next few days) SPX's downside gaps/magnets at 1115.10, 1114.05, and 1102.47, and, any gap that might be created at tomorrow's/Tuesday's open, see the five day intraday candlestick chart at http://bit.ly/3qGxf3

The SPX (S & P 500, http://bit.ly/i0nsT) Major Upcycle since 3-6-09 is probably peaking (still rising thanks to massive liquidity from the Fed). 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 peaking. A major/very large price and volume blowoff type of spike move is likely when SPX puts in a Major Cycle high.

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.

A Fibonacci 0.618 retrace of the -909.30 point decline from 1576.09 on 10-11-07 to 666.79 on 3-6-09 puts SPX (S & P 500, http://bit.ly/i0nsT) at 1228.55 (Major Cycle High target).

SPX's (S & P 500, http://bit.ly/i0nsT) volume was a well above average 4.387 billion shares today/on 1-15-10 vs the 60 day EMA at 3.708 billion shares, which is a bearish indication for early tomorrow/Tuesday, because, the big money probably was exiting in a major way today. Usually, an important cycle high/price spike will be accompanied/"confirmed" by a major volume spike (In this case "the day after," though the SPX ETF SPY had a major volume spike very early today, so, a major volume spike did occur very near the likely price spike/peak that occurred yesterday 1-14-10).

There's been a massive
Fed Credit/Quantitative Easing recently, see http://bit.ly/wQNYC


Fed Credit rose a significant/bullish +$9.339 Billion in 5 day period ending 1-13-10, see http://bit.ly/Ys2ds.

Fed Credit fell a significant -$3.570 Billion in the five day period ending 1-6-10 (Called "Quantitative Easing" when Fed Credit increases (trends up over months), which is a fancy way of saying that liquidity is being injected into the financial system/markets, which is obviously an inflationary easy money policy), which is a bearish indication, see http://bit.ly/Ys2ds.

Given the massive amount of
Fed Credit (Quantitative Easing) in recent days, weeks, and months one simply can't fight Bubbles Bernanke and the Fed for now. Bubbles Bernanke might be the Trade the Cycles Blog Goat of the Year in 2010. Stay tuned.

The five day SPX vs Lead Indicator Walmart (WMT) chart at http://bit.ly/4t6GS9 is extremely bullish, since WMT's leading to the upside by +2.00% to +3.99%, which tends to be a very short term bearish indication (became extremely bullish because SPX didn't respond well to a bullish Walmart (WMT) Lead Indicator).

Exxon Mobil (XOM), by far the most heavily weighted SPX component (3.11%), has a bearish breakaway gap and an ugly chart, see http://bit.ly/6Dr79y

Get ready for the (short term bearish now) XOM (Exxon Mobil) Lead Indicator, see http://bit.ly/8wiAN2

SPX's (S & P 500, http://bit.ly/i0nsT) pattern of doing a brief pop very early on followed by a fizzle nearly EVERY DAY continues (probably the big boys/program traders bidding the market up very early every day, then they dump it on the lemmings), see the five day intraday candlestick day chart http://bit.ly/3qGxf3

Massive Quantitative Easing in recent months, liquidity injected into the financial system, accounts for market strength recently.

A factor recently/now is that Fed Credit rose a substantial +$23.723 Billion in the five day period ending 12-23-09 (Called "Quantitative Easing" when Fed Credit increases, which is a fancy way of saying that liquidity is being injected into the financial system/markets, which is obviously an inflationary easy money policy), which was/is a bullish indication, see http://bit.ly/Ys2ds
.

A factor recently/now is that Fed Credit rose a substantial +$22.764 Billion in the five day period ending 12-16-09, which was/is a bullish indication.

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.

It's not a coincidence that an SPX (S & P 500, http://bit.ly/i0nsT) session cycle low occurred on 12-28-09shortly after filling the 1126.48 downside gap from the open,see the five day intraday candlestick chart at http://bit.ly/3qGxf3 Gaps have a strong tendency to provide a trading roadmap.

It's not a coincidence that an SPX session cycle low occurred at 1116.00 on 12-23-09, very soon after filling the 1118.02 downside gap from the open, see the five day intraday candlestick chart at http://bit.ly/3qGxf3 Gaps have a strong tendency to provide a trading roadmap.

SPX
(S & P 500, http://bit.ly/i0nsT) has another downside gap/magnet at 1069.30 (after 1115.10, 1114.05, and 1102.47), see the five day intraday candlestick day chart at http://bit.ly/3qGxf3 1046.50, 1025.21, and 1016.40 are the downside gaps after that.

The five day SPX vs Lead Indicator Walmart (WMT) chart at http://bit.ly/4t6GS9 is extremley
bullish, since WMT's leading to the upside by +2.00% to +3.99%. For the five day intraday broad market Walmart (WMT) Lead Indicator that includes HUI for gold bugs, see http://bit.ly/5zScR

The intraday broad market Walmart (WMT) Lead Indicator is/closed at slightly bearish (+0.00% to -0.24% vs SPX) today, see http://bit.ly/88OBwn

The five day intraday SPX Wall of Worry (SPX vs VIX) is very bearish, since a late session collapse occurred, see http://bit.ly/vryF4

The intraday SPX Wall of Worry (SPX vs VIX) is very bearish, since a late session collapse occurred, see http://bit.ly/UTZwc

VIX was up +1.59% vs SPX falling -1.08% today, which is a bullish indication for early Tuesday 1-19-10, because, it's a significant +0.51% rise in fear/+0.51% rise in the SPX Wall of Worry (SPX vs VIX) today, so, some significant strength is likely early on Tuesday.

Market breadth closed at clearly negative today (NYSE up vs down volume is/appears to be correct), which is a bearish indication for early Tuesday, see http://bit.ly/lPIyW. Cycles/Elliott Wave patterns/gaps are the primary considerations.

The six month broad market Walmart (WMT) Lead Indicator is super bearish, see http://bit.ly/nCMaM SPX (S & P 500, http://bit.ly/i0nsT)/the market and nearly all sectors, stocks, and commodities (like the gold and energy sectors) are likely to get savaged over the next 6 to 12 months.

Also, the three month SPX (S & P 500) Wall of Worry chart is very bearish (keep in mind that it's basically a lead indicator), see http://finance.yahoo.com/q/ta?s=%5EGSPC&t=3m&l=off&z=l&q=c&p=&a=p12,p12,fs,p12,fs,w14&c=%5Evix

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/months 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.

A factor recently/now is that Fed Credit rose a substantial +$23.723 Billion in the five day period ending 12-23-09, which was/is a bullish indication, see http://bit.ly/Ys2ds.

Fed Credit rose a substantial +$22.764 Billion in the five day period ending 12-16-09, which is/was a bullish indication, 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.

NDX (NASDAQ 100) looks like it's peaking (major upcycle that began in November 2008), see http://bit.ly/73BXOt

The precious metals sector appears to/might have finally peaked in early December 2009, see the Blog post from 12-19-09 at http://bit.ly/6Kl4GQ.

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.

SPX (S & P 500) has been in a Cyclical Bear Market since 10-11-07, NDX (NASDAQ 100) has been in a Cyclical Bear Market since very late October 2007, and, RUT (Russell 2000) has been in a Cyclical Bear Market since July 2007.

My original Trade the Cycles system uses the reliable Elliott Wave patterns (see the Trade the Cycles charts at http://www.joefrocks.com/GoldStockCharts.html) and maps them to cycles of various timeframes (an Elliott Wave is either an upcycle or a downcycle), from very short term (hours/days), short term (days/weeks), monthly (4-7 weeks), minor intermediate term (2-3 months), major intermediate term (3-12 months), long term (1 to 2 years), Cyclical Bull/Bear Market (6 months to 7 years, yes, a bull/bear can be relatively brief), Secular Bull/Bear Market (8-20+ years).

Gaps are very important also, since most gaps get filled and they often provide insight into when cycle highs/lows will occur.


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

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