Rule-Based Trading Systems

[northam43]

NASARAVI - Thank you for your comments.

I'll try and explain my position the best I can.

The market I believe is coming up to a major intersection. The question is, does it go straight or make a turn. My reference to a major intersection is that the SPX Monthly has now came into play. Let me explain by each time frame:

Here is the SPX Daily chart. It shows that the SPX Daily is currently in Phase I 10th Trading Day(below the upper trend line):
The average for a Daily Phase I cycle is currently 5.38 trading days. So the Daily Phase I is currently due to go to Phase II at anytime. The average Daily Phase II cycle is 7.90 trading days. The last Phase II cycle only lasted 2 trading days, it touched the upper trend line and then fell. I'm expecting pretty much the same for the current cycle. Why, because a new weekly cycle Phase I was confirmed on Friday, so that would leave me to believe that the Daily Cycle Phase I will be extended maybe by another 10 trading days or so. So if the Daily cycle remains in Phase I then the down trend continues and the upper trend line and lower trend line prices will decline. Therefore, when the Daily does go into the Phase II cycle the upper trend line price(1174.22) maybe alot lower than what it is now.



Here is the SPX weekly chart of the current confirmed new weekly Phase I cycle: How long will this weekly Phase I cycle last? The average weekly Phase I lasts 6.33 weeks, the last The last two cycles lasted 2 & 3 weeks. The one before that was 30 weeks.
At this point I don't believe this will be a 30 week phase I cycle. Why? Because the Monthly SPX has not yet started a new Phase I and also the monthly has not at this point made an EMA 3/8 bearish crossing. So I currently expect this weekly Phase I to be around the two to three week time frame. For the weekly to remain in Phase I cycle status the price must remain under the weekly upper trend line price which is currently 1182.96. That price should be lower at the open on Monday. The current SPX price is 1135.68 and the current weekly lower trend line price is around 1134. So for the Weekly to go to Phase II it would have to gain about 45 points next week. It could happen but probably not likely, the last 4 weeks ranges was 139.21, 38.18, 33.60, and 31.10. Also if you were to go back and look at new weekly Phase I cycles, the low was always lower than the previous weeks low. In this case the previous weeks low was 1065.79. So I would expect this weekly Phase I cycle low to be lower than 1065.79, based on historical data. This could be the one time that history is again changed, who knows? That is what I am basing it on.



Here is the SPX Monthly chart of the current Phase II cycle which is now in the 10th Month. The average monthly phase II cycle is 18 months. The average complete cycle (both Phase I & II) is 30.75. The SPX monthly cycle is currently in the 29th month.
The current SPX monthly upper trend line price is around 1135, the current SPX price is 1135.68. So the SPX Monthly is just sitting above the monthly upper trend. If on June 1st the SPX price opens below 1135. Then a new monthly cycle phase I could be underway. So the question then would be how low will the monthly go? The current monthly lower trend line price is 1046.68. I would expect it would atleast go to that level. Why? Because once again historical data has shown me that each time the Monthly has gone to Phase I, the lower trend line has been hit. Could it go lower than 1046.68, sure. How much lower? That is the 6 million dollar question. However, there are some important indicators to watch. One the PPO (3,8,4) if it makes a bearish crossing (which it currently has) and the leading indicator drops below the zero line, that would be a very bearish signal. As long as the PPO stays above the zero line, the Monthly Phase I will most likely last only one month. Another indicator the EMA 3/8. If the EMA 3/8 completes a bearish crossing, watch out below.



So now I have shown you all three time frames, there current cycle status, and what to look for. So now lets put this all together and come up with a possible timeline of events:

Daily Hits 1155 (Phase II) next week, then Daily starts new Phase I. I expect there could be two to three more Daily cycles before the end of June.

Weekly goes to 1155 then closes the week out around 1120, then the next week (last week of the month) closes the week around 1085. Then the 3rd week of the cycle it puts in a cycle low that would be around the 1st week of June. Then by the middle to end of June it hits Phase II.

At 1085, a new Monthly Phase I cycle would be underway. It could then hit the lower trend line at around 1047 by the first week of june or middle of June and put in the new low of the year, then the correction could be over and by the 1st week of July the Monthly hits the upper trend line somewhere around the 1120-1130 area, putting it back in Phase II and we are again off to the races for another 15 months

I know this has been long. But I wanted to explain in detail what I am seeing. Now all this could change tomorrow, or next week. This is what I see as a possibility today. Questions are always welcomed and if you see something I don't, please share it. I will update this when things change.