Trade the Cycles

Saturday, February 06, 2010

Why SPX Will Probably Take Out The 1150.45 1-19-10 Cycle High

Why will SPX (S & P 500, http://bit.ly/i0nsT) probably take out the 1150.45 1-19-10 cycle high and fill upside gaps at 1097.28/1103.32/1116.48/1150.23 (SPX probably put in a Monthly Cycle Low onFriday 2-5-10)?
First, a very bullish daily white candle (close above the open) with a very large inverse spike occurred yesterday 2-5-10, see http://bit.ly/i0nsT. Candles usually provide good insight into the nature of cycles (candles are a very useful tool). The more bullish (or bearish) a candle is the stronger an upcycle (or weaker a downcycle) tends to be.
Second, on 1-19-10, when the SPX (S & P 500, http://bit.ly/i0nsT) 1150.45 1-19-10 Intermediate Term Cycle High (for cycle that began on 11-2-09) and potential Major Cycle High (cycle since 3-6-09) occurred, the candle not only isn't bearish, but, is a relatively bullish white candle (close above the open) with only a tiny spike, see http://bit.ly/i0nsT.
However, an obvious major negative is the fact that SPX (S & P 500, http://bit.ly/i0nsT) put in a very bearish triple top in mid January, see http://bit.ly/i0nsT. However, while volume spiked dramatically in the two sessions after 1-19-10, it was a much smaller volume spike than occurred in mid December 2009 at a Short Term Cycle Low, see the volume bars at the bottom of http://bit.ly/i0nsT, which suggests that SPX probably didn't put in a Major Cycle High on 1-19-10.
Another major positive is that virtually all gaps have been getting filled since March 2009 (3-6-09 SPX Major Cycle Low occurred) or shortly thereafter, which means that the likelihood of the SPX (S & P 500, http://bit.ly/i0nsT) upside gaps at 1097.28/1103.32/1116.48/1150.23 getting filled is probably high, therefore, the 1150.45 cycle high that occurred on 1-19-10 will probably be taken out.

Even if SPX (S & P 500, http://bit.ly/i0nsT) did put in a Major Cycle High at 1150.45 on 1-19-10, it's likely to closely approach that cycle high in the near future, since important downcycles or upcycles usually begin relatively flat.
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." I'm skeptical of it's validity in this case, partly because of massive Fed Credit/Quantitative Easing in recent months).
Nothing discussed on this Blog is a recommendation, or, should be construed as investment advice.

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posted by Joe Ferrazzano at 4:19 PM

2 Comments:

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

    I'm obviously still having technical difficulties with Blogger. Apparently, there's now a 1 Megabyte memory limit per post.

    I'm going to start using part 1, 2, 3 etc for each post or I might use another Blogging site or maybe Hubpages, and, will post the link on this Blog.

    By Blogger Joe Ferrazzano, at 7:36 PM  

  • My posts aren't taking up 1 Megabyte of memory, so, something is screwy with Blogger now.

    By Blogger Joe Ferrazzano, at 7:42 PM  

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