Turn Around Tuesday? - MCO Update

The gloom and doom is so thick you can cut it with a knife. Frankly the fundamentals are as foul as I can ever recall but maybe enough is enough, for a little while at least. If the indexes don't collapse tomorrow (still a possibility) then todays low is looking like it marks an important reversal point. Yes, prices will possibly retest today's lows, maybe even exceed them, but if the the positive divergences remain, today was a turning point. (see the chart notes) Of course, if not, then it's not.


Annotated chart - click to enlarge

Initially it is best to consider any reversal here as just the start of a
trading rally. While the 65 min indicators (MACD, STO, RSI etc) reversed
yesterday, the dailies are still negative and need to be watched closely.
Note the steadily increasing volume on each of the major lows over the last year. The 10% component of the MCO made its lowest reading at the July 15 low, I think this was the capitulation point, making the current low the retest.

If breadth can hold up over the next few weeks, during what will probably
be a backing and filling period, then we can be more optimistic over the
future direction of the market.

The fact that the 10% index didn't go any lower really surprised me,
especially with the current market conditions and news. I actually didn't
think it would happen until late yesterday afternoon as I was running the
numbers. It's still not a done deal, that will take more time.

The McClellan Oscillator is the first indicator I ever used, I hand charted
it for many years (including intraday during the 87 crash) so I really
understand how the numbers work. The -500 level I've been referring to was
once -200, it has been creeping upward as the number of issues increased.
So the exact number isn't important, it is relative, but if you look at my
MCO chart over the last year, all the deep plunges have turned the market but
failed to produce a bottom.

So, if yesterdays low in the 10% index holds up it would be very encouraging.
Second, this can produce a good rally which later breaks down with the
10% index going below -500 again, that wouldn't be so good.

Crunch Time - MCO Update

Well, tomorrow's going to be a critical day, everything's marked on the chart:


Click to enlarge

SPX weekly Cycles - 08/09/12

I find the cycles interactively with a piece of software I wrote that allows me to draw them on the chart, and fit them visually by eye. I use the Yahoo data set going back to 1987 and try to find the best match visually.

In the chart I've posted below there seems to be a dominant weekly cycle period of just over 13 weeks (13.016), double this is 26.032 weeks which is close to what Tim calculated (26.286).

The nominal 26 week hits 3 weeks from now

I also found a good fit using the 5X multiple, or 65.016 weeks. This should hit in the first week of January 2009. (Tax loss selling)

The span of 57.75 weeks is a bit rougher in the overall match accuracy but hits this week and is symmetric with the July 2006 - Aug 2007 lows.

Also marked on this chart are the retrace levels for the entire move since the 2002 low. With the markets under stress, a 50% retrace to 1172 seems highly likely with a very good chance the 1150 area will be penetrated as well.

This is an ugly market we are still on a crash watch.


Click to enlarge

Spx Cycles 9/11/08

A simple update to the post on Sept-9, the turn came half way through the range (Blue). The Cycles were redrawn since the last chart but before todays trading.

Gold Stocks - Close to the buy point?

Could be that this sector is setting up for a huge run higher.