Summer Rally?

I'm posting on the road, without access to many of my regular technical tools, including my cycle charts, but for the moment the markets are looking more positive than thay have been over the last two months.

The NYSE MCO looks like it has finally completed a complex bottom and reversed to the upside today. Stronger than market stocks should begin moving higher. This has been a fairly nasty decline and a bit more backing and filling could occur but I doubt prices of the major indexes will fall much further over the short term.

One caveat: I checked the unadjusted MCO values yesterday, including the values for the 10% index which were not good, in the minus 700 range. These are negative blowout values on the downside and will require a retest of the recent lows again within the next few months.

My general opinion is that one could short the upcoming rally, looking for the final lows in the August timeframe. The chart of the NYSE composite looks like it will fall to 8000 (another 6% or 7%) on the retest.

See the chart at Stockcharts.com:
http://stockcharts.com/charts/indices/mcsumnyse.html

DJIA cycles

Not too much to say here, the McClellan Oscillator bounced off the zero line, and after a bit of noodling around the uptrend should resume.
DJIA 65 minute cycles
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SPX and the Golden Section

SPX Weekly with Golden Section Grid
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SPX Cycles 3/17/08

I’ve updated the 65 minute SPX chart because the short term cycles have been punching in like clockwork over the last few CIT’s. With the market internals strongly oversold, including the MCO and its 10% Index component which are at relatively negative extremes we can start looking for a turn in the markets. Hint: this may be it, right here.

So I took a look at the current cycles and the 56 bar, (9.38 TD’s) indicates the market should turn tomorrow sometime in the first hour. Considering, the oversold condition, it is almost safe to assume this will be a low.

Moreover, I have also marked two instances of the 59 bar cycle. Actually, these darker instances are only mid point markers which served to pick the high between the actual cycle measures (the wider and lighter lines) Normally I wouldn’t bother explaining these, but the last two occurrences have been lows rather than highs. When cycle timing points reverse, or invert as we say, it is often an indication of a change in the prevailing trend.


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MCO update 3/17/08

Not much to say, the markets are oversold but in panic mode. The MCO suggests we could have a large bounce starting sometime in the next couple of days. The 10% Index is blown out on the downside, so whatever rally we see coming up should be followed by another retest of the lows. Until we get a sucessful retest, one where the 10% index stays above the -500 level then the trend remains bearish.

As for a bounce, the next cycle CIT is between 9:30 and 10:30 tomorrow Tuesday.

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Also, CNBC should fire Jim Cramer.