Your Economy (No Politics)

[Bullwinkle]

CYCLE Turn on/around March 16th

As mentioned in my last post with which this post replies, we needed to do the obvious; either take out the 50DMA or expect the 2050's to be a lower high with us going to lower lows and the latter is exactly what we got. I had pegged the 1980 area as a possible downside target and that was broken decisively as we went into the 1940's. While pegging exact levels is not my forte', I have been pretty good at trend spotting as of late and we did find our low and cycle turn on the 11th. We were a day late, but well within our cycle turn margin for error. Being as Economic #'s were not as prevalent this past week, I did not expect to get quite so much of a move to the downside. The ones that did come out such as Retail Sales were up as Inventories edged higher and Consumer Sentiment edged lower, but the terror bombing in Spain was probably the main catalyst for the extended turn and deeper retrench.

As for the week ahead, we are looking at a bunch of Eco #'s such as the Empire State Index, Industry Production and Capacity Utilization, CPI, Jobless Claims, LEI and the Philly Fed. Then top it all off with Options Expiry and we are in for what could be a wild ride. The mini cycle turn is expected on/around the 16th and I expect that to be a high somewhere in the neighborhood of the COMPQ 2000 level, give or take a few points. I do not expect us to get much higher than that before once again continuing our current pattern of lower highs and lower lows with the 1900 area looking like our next support level and possible downside target. If 1900 does not hold then we could quite possibly go all the way down to the 1840's level. A look at the chart below shows that between the 1840 and 1940 range a series of gaps, swiss cheese if you will.



There is a good chance that those get filled before our next cycle turn on the 24th, which by the way is a big cycle turn date. It would be a low and a resolution to this past flurry of mini turns. If this all plays out successfully, it could very well act as a spring board into a nice rally of 200-300 points, maybe more. I generally do not like to look that far ahead because so much can happen between now and then (as witnessed last week), so for now lets stick with what's in front of us, namely the coming turn on the 16th and Ops Exp which almost always adds a dose of volatility and then re-evaluate from there...