Momentum Cycles - Stock Market Timing Cycles

PST
March 4, 2009
10 15 AM
Close the long dollar position versus EURO if we tag above 1.27 with that as stop loss.

Oversold and an unbelievable series of down days in a row make a bounce likely. Don't buy it.Unless we go above 7500 DJIA its all noise. Big money is selling rallies to get cash, or shorting them.We didn't get the 670's on the S and P 500, but we ended down into the 690's.

March 3, 2009

Predicted low for today was 695 S and P 500. Print low was 699.70.High near open was 729.57. High to low tradeable points were 30 some S and P 500 points in one day. We got the direction and amplitude right for sure.

We captured the majority of the recent huge decline and posted the point objective and the predicted date of February 21 at the end of January. The break of 8000 DJIA demanded at minimum 7188, due to momentum factors and the head and shoulders breakdown. The decline is still in force- at some point we will have a sharp 4 -6 day countertrend rally, after which shorts can be entered again with a less crowded field. You don't have to trade all the time- when you have too much company with your trades, its time to be careful.

US dollar is trash, but other currencies are worse trash.Euro looks terrible, due to debt default counterparty risks in Eastern Europe. Countries like Latvia can't pay Germany what they owe. We favor the US dollar over the Euro. Head and shoulders breakdown of the Euro implies it will fall further, versus the dollar. Shoulder was the 1.30-1.275 area. Euro is now 1.26.Eventual target could well be 1.2 or lower.Could fill the gap at 1.265, but eventually we will likely see 1.2.

*** The S and P 500 could tag the high 670's today.

March 2, 2009
8 30 AM

S and P 500 target is now 695 for today or Tuesday in spite of oversold conditions.

Feb 27 , 2009

Fridays in this weak market tend to sell off, and we didn't pass the 7500 DJIA where we broke down from. Oversold readings are warring with selling pressure at the close of the day by big money. We could see the 740's on the S and P 500,or we could rally. We know a big move is coming, but after a huge point gain in the last 8000-7188 DJIA decline captured here, we are going to stand aside, not short or long except from shorts from way back near 11000 DJIA, still held. Gold is nearing short term oversold, but longer term is still overbought.

**Total put/call ratio is bearish for DJIA currently.

Feb 26, 2009

A large point wave is coming today or Friday. We need to close above 7523 DJIA to confirm the rally has legs, and that the large move is indeed up. Otherwise, its another flash in the pan bear rally, over quickly,and the move will be to retest the lows. We got the targeted S and P 500 move intraday, late, yesterday, to the predicted 780's. We said to cover shorts completely incrementally before the 4% rise, so everyone was able to capture the down move before the rally started. At this point the oversold status is somewhat worked off, so no sure prediction can be made.

Feb 25, 2009

Got the rebound we looked for...now is it a bottom?

We looked for a low on February 20-21 at about 7118 DJIA once 8000 broke. We got it, although it was on the 23rd, and covered shorts into it, completely, and in stages, before the rebound. We could get 776-787 S and P 500 intraday but its also likely that we will see some down action in the Wednesday -Thursday period after momentum wavers.

Gold was said here to be overbought, and so HUI, a gold proxy, fell over 8%.

Feb 24, 2009
7 45 AM
Look what you had in advance....

from this commentary on Jan 30, 2009

"Be alert for a crash scenario developing IF well-tested support near 8000 is broken,
leading into February 20-21, with a target of past the old lows to possibly 7188 DJI"

Dow Jones Industrial Average
(DJI: ^DJI)
Index Value: 7,114.78
Trade Time: Feb 23
Change:  250.89 (3.41%)
Prev Close: 7,365.67
Open: 7,365.99
Day's Range: 7,105.94 - 7,441.02

We are still looking for a bounce, but again, don't buy it.

Those who went short and incrementally covered into each decline till Monday can now retire from trading for several years.

You should be out of all shorts except those from the 11000 breakdown on the DJIA, where the distance supplies "wiggle room".

As we said, below 8000 DJIA support would give a panic.

Below the November lows, another.

No current recommendation.

Feb 21, 2009
Economists polled in December were uniformly bullish on the future, expecting a 20% rise in DJIA. Bets on the upside as seen in the put/call ratio, on January's start, reached 2007 levels, seen only at 3% below the all- time high. Recent polls show 61% of Americans think things will be better in 5 years.

THE MAJORITY IS ALWAYS WRONG AT TURNING POINTS.

We hit the predicted 750's on the S and P 500.

Look at the stochastic on the momentumcycles main page. We are oversold, so a rally is due soon. That's why a suggestion was made to scale out of shorts incrementally, as timing the turn is tricky when we could rally hugely out of oversold.

That's all for now; I'm exhausted. It has been an amazing week, and this analysis takes hours per day. No further thoughts for Monday, unless the muse strikes on Sunday.

Feb 20, 2008

Wise to continue to scale out of remaining S and P 500 shorts as we are very oversold and a countertrend rally can began any time now.I know that is hard to believe as today could easily see 750's on the S and P 500. We hit the 770's as predicted. We hit 7500 DJIA and lower as predicted months ago. But when it turns, within a few days, it will bounce up and the scaling out of shorts incrementally will look wise. Additionally, Gold is overbought.

Feb 18, 2009 
Close
Market makers 
could try to rally it into expiration, to clean out the bears and make them give back their gains.
Short term it might be wise to scale out of most shorts except those held from11000 DJIA, in spite 
of giving up possible further gains from a decline.

Feb 18, 2009
7 15 AM

Oversold on all stock indices but don't buy. could reach 770's or lower on the S and P 500. Some traders who were short have told me they have taken partial profits on their positions, scaling out incrementally.

Feb 17, 2009
2 45 PM

Look for a move Tuesday on the S and P 500 to target 780's and possibly
lower.

Feb 15, 2009

Only got to 840 S and P 500, not even to the predicted 850 -870 resistance zone on Friday. Another trader pointed out that the QQQQ outperforming S and P 500 is good until it reaches an extreme level of relative strength, revealing perhaps too much money in too few issues?,and then the market tends to sell off. That level is .37 or above , which led to the last 2 selloffs of note. As of Friday, that ratio is .369....

Last 2 extremes were mid August 08 and early November 07. Take a look at the S and P 500 on those dates on YAHOO charts, and what happened next...

Feb 13, 2009

Mr.Market giveth, and then taketh away.

That's why I suggested a trailing stop for shorts.If you were short, you mechanically captured the lows near 7700, and covered on the way up to 7900.

The government doesn't want a plunge below the lows. So they announced something timed to make the shorts cover and cause a rally. And its pre -expiration week as well, so those who were counting on short or put profits in a straight line into next Friday's expiration made some market maker's lunch money from 2-4 pm yesterday.

Still, even with a stochastic buy in the short term, we still have major resistance at 850- 875 S and P 500. 875 area is February highs. It's still a bear rally driven by news and expiration positioning. Expect whipsaw heaven Friday to next Friday.I still expect the eventual target to be 750 S and P 500; when is the question that isn't answerable as of today. Standing aside for now except for long term bearish bets from up near 11000 DJIA from long ago, still held.

Feb 11, 2009.

Historically high put/call ratio signalled excessive DJIA/QQQQ bullishness, giving a no -brainer sell signal in time for our early morning premarket call yesterday for traders to take profits from the predicted last oversold rally without losing much profit, if any, on yesterday's open. And yes, it still appears to have been a countertrend rally that was sold on the news of the "porculus stimulus" bill, and the "buy the rumor , sell the news" still works.

Traders who went short are up over 4% in one day, hugely more if leveraged.

Put a trailing stop on your short positions, don't give back money to Mr.Market.

Unless we quickly make highs above the last highs, and surpass the 50 day moving average of the DJIA and stay above for 3 days, I'd assume we are going down, and remember the target repeated here over and over of the November lows as the place the bulls will make "Custer's last stand".

When they break, we will see a a panic again.

REMEMBER BUY AND HOLD IS DEAD, AND FUNDAMENTALS DON'T WORK, AND IN THE 'LONG TERM", TAKING A SMALL LOSS IF YOU ARE WRONG MEANS PRESERVING CAPITAL.

Which we have done for you, if you've continued to read this page...

Feb 10, 2009
5 day stochastic short term sell signal on QQQQ. Overbought levels need to be worked off. Put/call ratio is at levels seen before selloffs.

Feb 6, 2009
9 30 AM
Extension of bear rally likely as QQQQ stronger than DJIA.
Feb 4, 2009
S and P 500 approaching top of oversold rally bounce in time and price. We haven't seen the last of under 8000 DJIA for sure, support there will be broken.