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DXY – Weekly Cycles

I only use Cycles as a rough guide but I have observed the following:
– 84 wk Cycle on DXY seems feasible and generates the next trough around mid-Feb 2013
– 42wk cycle appears to have topped around mid July ‘12
– Cycles are more prominent within triangles and the 84wk cycle has been reasonable accurate
since 1994 (and particularly accurate over the last 5 troughs)

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FTSE100 – Quick Overview

The longer-term
– FTSE does appear to be struggling to get above 6100.
– Monthly candles look bearish in this area and the 40/80 day cycles, OBV and MACD make any solid gains look bleak.
– Only a convincing break above 6100 area would invalidate the bearish cycles – I’ve found these to be quite reliable in the past.

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ASX200 – Still within a bearish retracment?

– US Indices have been outperforming the ASX since Oct 2009.
– More recently European stocks have been outperforming the ASX from around September 2011 (particularly the SMI and DAX).
– In Jan 2012 the CRB Commodities Index ratio line broke its own descending trendline, showing commodities are also outperforming the ASX.
– Should stocks continue to decline and Commodities go up, we can expect the $AUD to continue gaining strength.
– A descending triangle appears to be forming on the ASX200. We would need to see a clear break below the 4100 swing low (and triangle’s lower trendline) to confirm.

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FTSE100 – MARKET BREADTH

I had been watching the divergences between the small-cap stocks and FTSE100 for the majority of last year, so when the losses did come it didn’t come as too much of a surprise.
Without trying to sound too bullish too soon into the year, we now see small-cap and large-cap stocks converging again, and with the FTSE closing above the 200-day MA for the first time since August 2011 its certainly not a bad start to the year.
We may we be due a pullback but I’ll be keeping an eye on my bullish stock list for Q1 of 2012 and hope to catch some larger moves.
***

“Trade what you see, not what you think…”

Follow @cLeverEdge

SP500-Daily-Cycles

SP500: Update


SUMMARY


To quote myself from last week “I don’t see a quick conclusion coming from the current market”. Hmmm… Well that was a mistake! 

However we did see that vitial close beneath the 1260 for losses to take hold, and done with such force that the potential bullish symmetrical and and bullish hammer candle were quite literally obliterated on Monday after opening, despite opening with a promising gap-up. 

Monday’s trading saw the 200eMA get tested, but Tuesday rallied straight through this critical support as the markets witnessed the largest declines 2008. In fact losses were so rapid last week that we’re already close to reaching the minimum target from the head and shoulders pattern. 

Friday saw a critical 50% fib level tested but we closed the day just above it producing a long legged Doji. This is hardly a bullish  sign but represents the markets uncertaintly – personally I think the market is just catching its breath for another drop. 

So how long can we expect the bears to remain in control? 

The cycles are looking as bearish as ever but hinting a possible retracement. Weekly and Daily RSI have entered the oversold territory, so at best I anticipate a retracement before further losses and will continue to short any pullbacks. I don’t expect any gains to reach the 200eMA any time soon (if at all) but this will provide a solid resistance level, along with the previous swing low of 1260. 

If we can break through the fibonacci cluster my eyes will be set on the swing low of 1010.

CYCLES


22.1 Day
Centred  SMA
 
So it would appear the larger cycle has topped painting a bearish picture overall. 


MARKET BREADTH

McClellan
 Summation:
































I’ve been following the divergences between the large cap and mid-cap stocks US stocks since last year. The Russell 2000 is the most prominent.



0% (down from 40.49%)

 0% (down from 22.87%)

 0% (down from 7.89%)


SENTIMENT


1.23 (up from 1.0) – The highest level since March 2010


30 (Down from 69) – From just under overbought to just over overbought in 5 trading days

Closed at 32 but peak 39 on Friday making it the highest level since July 2010


TREND
Primary
 

SUPPORT & RESISTANCE


Fibonacci:















Resistance:









Support:


Fib cluster around 1100 – 1108 may provide support – of broken then I’ll look the swing low around 1010 (which is also near the 50% fib line)

1260: Weekly 50eMA 

1276: Daily 200eMA  

1255: Weekly Candle Marabuzo Line

1230: Daily Marabuzo Line




1188: Weekly 200eMA  

1170: Swing low 

1130: Pivot 

1100 to 1108: Fib Retracement  

1010: Swing Low 


PATTERNS
Reversal

















Weekly Candle:

Daily Candle:
















Using the distance between the head and neckline projects a minimum target of 1134.5.


Bearish Belthold

Long Legged Doji (Aka Rickshaw Man)
***

“Trade what you see, not what you think…”

Follow @cLeverEdge

SP500-Daily-Candles

SP500: Update

Outlook
2 weeks since my last SP500 post and the market is still undecided as to which way it wants to go. 



The 1300 level held well until last Friday when we saw an Intra-day low of 1286. Although we saw a recovery near the end of trading it still closed below this important level at 1295.2


So yet again the dominant trendline and 200eMA hold, but a concern to me is each swing high has been lower and is trapped between the 50+200eMA. 


We could however be witnessing the formation of a Symmetrical Triangle (Bullish) and I see no evidence of bearish divergence on the daily or weekly RSI. 





A quick look at the P&F chart (using closing prices) demonstrates the range-bound trading we have been witnessing since the April ’11 high. We need a close above 1360 to confirm the dominant trend is still on force, whereas a close below 1260 would warn of a reversal. 



So to summarise I still have a very mixed picture. On one hand I have bearish cycles, bearish monthly/weekly candlesticks and decline in stocks above their 5/50/200 eMA’s. 

On the other hand I have a bullish symmetrical triangle, no bearish divergences, a neutral balance between put/call options and the dominant trendline and 200eMA which refuses to be broken.

I don’t see a quick conclusion coming from the current market, so I’ll be sticking to short-term trades using support and resistance levels with oscillators and divergences. 

    
Sentiment
BPSPX (Bull/Bear ratio): 60.00 (Down from 69)

VIX: 25.25 – A relatively high reading (compared to recent weeks) implies fear in the market and increases the chance of a subdued market next week. 

A low reading represents complacency, which is when most people get ‘caught out’ by the market and a big move can occur. 



Market Breadth
All 3 readings have dropped significantly  from my past assessment 2 weeks ago. 

% Stocks above 200 sMA: 40.49% (down from 63.36%)

% Stocks above 50 sMA: 22.87% (down from 41.9%)

% Stocks above 5 sMA: 7.89% (down from 35.22%)

Above 70% is considered overbought and below 30% oversold.




On a personal note it is encouraging to see the cycles have held relatively well, and from a timing perspective that I anticipated the market to remain choppy and indecisive for a minimum of 2 weeks, as has been the case.  


Whether this is down to skill or pot luck remains to be seen, but whilst these swings highs remain bearish so will my cycle outlook. 


With recent swing highs getting lower it fits in with my original analysis that we should have seen a top on the the larger cycle, and for it to bring downward pressure upon the smaller cycles. 




Patterns


  • Potential symmetrical triangle forming on daily.
  • Friday’s candle is an inverted hammer (bullish warning) with a relatively larger real-body, and bounced off the 200eMA. 
  • Monthly Candles: 2x Hanging Men (Bearish) followed by a Shooting Star (Bearish).
  • Weekly Candles: Last week saw a bearish long real-body and a close beneath the 1300 level. 
***

“Trade what you see, not what you think…”

Follow @cLeverEdge

FTSE100-HEW

FTSE100: Harmonic Elliot Waves

Harmonic Elliott Waves is a new method of wave counting by Ian Copsey. He’s modified the original impulsive wave structure by using harmonic ratios of the fibonacci sequence to forecast his wave counts. 
I’m working my way through his new book Harmonic Elliott Wave: The Case For Modification of R. N. Elliotts Impulsive Wave Structure so naturally keen to take apply this to the FTSE and see if I can get even remotely close.
I am by no means a master of his method yet, but will continue to study it as the calls Ian has made using his method are truly staggering, and at times his price forecasts on Indices and FX are within a pip.. months before the event happens! I won’t reveal his methods as they are in his book, he teaches a course and he now offers an analysis service. There’s a free introduction on his website with a pdf and video, and is definitely worth a look if you like count waves. 
Assuming FTSE does continue to decline I feel that the 4971.4 is a crucial swing low, so could prove to be an appropriate target as this is also a 50% retracement level. 

SP500-Daily

SP500: Update

Summary
It has been a choppy week to say the least with the bulls and the bears almost playing a game of peek-a-boo with one another. The daily 200eMA is looking tired and fed up and not too far away from becoming completely flat. Although we haven’t seen a close beneath the 200eMA I think it’s only a matter of time – there have been plenty of attempts…

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SP500-Cycles

SP500: Market Cycles

The smallest cycle is 35 weeks and we are approximately 1/4 of the way through – so initially expect to see gains on the US markets until we reach it’s mid point (around mid July) where we could begin to see the decline lasting until around mid November 2011 where it should bottom out.
Using the markets bottom in March 2009 as my starting point, we can see that the crash was the results of several major cycles ending simultaneously. Around mid November 2011 we will see the 3 smaller cycles converge, which will in fact be the mid point to the larger cycle. This suggests that the market will not crash as deep as it did in 2009, but it could still be quite significant drop.

FTSE100-Market-Breadth

FTSE100: Market Breadth

Quite excessive divergences have been forming between the small-cap and large-cap stocks within the UK and US markets. Although this does not provide an accurate turning points in price or time, it does help provide a ‘heads-up’ to the possibility of a reversal, and aid me with alternative Elliott-Wave counts if specific price points are broken. In short, “The troops are struggling to keep up with the generals”.

 

If FTSE100 breaks 6100 convincingly and turns this into support, then this would indicate further gains and we can temporarily ignore the inter-market divergences. If however it fails to break the level of 6100 then falls below 5817, then my bias would lean towards a change in market direction and to call a possible top. Either way I have reduced my end of day (EOD) stock positions within my portfolio to the bare minimum and will await the market to decide.