Trade the Cycles

Wednesday, February 03, 2010

Early SPX Weakness Followed By Strength Appears Likely On Thursday

Early SPX (S & P 500, http://bit.ly/i0nsT) weakness followed by strength appears likely on Thursday, see the five day intraday candlestick chart at http://bit.ly/3qGxf3, and, see SPX's bearish intraday candlestick chart at http://bit.ly/12SpXH. SPX's inability to fill today's upside gap at 1103.32, despite very bullish five day WMT/XOM Lead Indicators, see http://bit.ly/9k8LhW, is obviously a bearish sign. 

SPX (S & P 500, http://bit.ly/i0nsT) is probably still in Wave 4 up (since Friday 1-29-10) of the Monthly Downcycle since 1-19-10, when an important SPX Major Cycle High might have occurred at 1150.45, for the upcycle that began on 3-6-09. 

Trading Roadmap: WATCH SPX's (S & P 500, http://bit.ly/i0nsT) upside gap/magnet at 1103.32 (1116.48 next gap after that) early tomorrow, and, any gap created at tomorrow's open. Also, keep in mind SPX's (S & P 500, http://bit.ly/i0nsT) downside gaps/magnets at 1073.87, 1069.30, and 1046.50, see the five day intraday candlestick chart http://bit.ly/3qGxf3. 1025.21 and 1016.40 are the downside gaps after that. Much of the time SPX is simply engaged in gap filling action.

Market breadth closed negative today (NYSE up vs down volume is/appears to be correct), which is a bearish indication for early tomorrow/Thursday 2-4-10, see http://bit.ly/lPIyW. 

Follow me on Twitter (highly recommended), see http://twitter.com/tradethecycles.

VIX was up +0.56% vs SPX down -0.55% today 2-3-10, which is a neutral indication for early tomorrow/Thursday, because, it's a slight +0.01% rise in fear/+0.01% rise in the SPX Wall of Worry (SPX vs VIX). 

The five day intraday SPX Wall of Worry (SPX vs VIX) is very bearish on a short term basis, since a huge rise in complacency occurred since early in 2-1's session, which points to early weakness tomorrow, see http://bit.ly/vryF4.
 
The intraday SPX Wall of Worry (SPX vs VIX) is very short term bearish, since a sharp decline in VIX/rise in complacency occurred since early in today's session, despite significant SPX weakness, which points to early potentially severe weakness, see http://bit.ly/UTZwc
 
The intraday WMT/XOM Lead Indicators closed at very bullish/neutral today, see http://bit.ly/bKhNsR, which suggests that early weakness is likely to be brief.
  
Both the five day Walmart (WMT) and XOM (Exxon Mobil) Lead Indicators are very bullish (+1.00% to +1.99% vs SPX), see chart at http://bit.ly/9k8LhW. For the five day intraday broad market Walmart (WMT) Lead Indicator that includes HUI for gold bugs, see http://bit.ly/5zScR. 

Maybe XOM is an even better lead indicator than WMT, since XOM is the highest weighted component of SPX (S & P 500, http://bit.ly/i0nsT) by far (about 3.11%).

Get ready for the VERY bearish three month XOM (Exxon Mobil) Lead Indicator: see http://bit.ly/8wiAN2.

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.

The precious metals sector hit a 5% follow through major sell signal recently (probably did in the week ending 1-22-10), see the XAU's second weekly view candlestick chart at http://bit.ly/aMNz3g. Note that the XAU has broken well below (5%+ below) it's uptrending channel that was in effect since early 2009. 

posted by Joe Ferrazzano at 2:59 PM

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