AI
Thursday, March 06, 2008 6:31:58 AM
so what the hell has happened since??
here's the daily chart into mid january. i've noted the 10 and 5 wk nests of cycle lows since the aug 07 4.5 yr low. the first 10 wk cycle acts as expected, new highs and right translated. it was 47 days long, right on the button for avg 10 wk sample size of approx 48 days. it also divides nicely into it's two component 5 wk cycles. a rally off the 10 wk low starts and then the we have a failure. during the 1st 5 wk cycle off the oct 10 wk low, prices break down below the oct 10 wk low and drop all the way into nov 26 the exact time window for a 5 wk cycle low. the fundamental effect of the expanding sub prime crisis is starting to overwhelm cyclic impetus. prices rally off the 5 wk low but now have to contend with fundamental effect and an upcoming 20 wk cycle low due in the first day or so of the new year. i was encouraged that prices held above the nov low, were holding well above the aug low, and damage seem contained to the credit sensitive sectors of the SP500 such as XLF and XLY. the first few days of a new year are often wild cards for cyclic analysis as often there is large scale movement of portfolios in or out of stocks. the first 6 days saw a very minor attempt to bottom (right where a 20 wk low should) and then 4 more days down into a reversal bottom. prices consolidate for 3 days and then collapse into the january lows. this sudden collapse IMO was the result of the liquidation of the french Soc.Gen. bank holdings. traders saw it coming and no one was going to bid. that selloff combined with the credit fears have created a cyclic pause zone that the market seems trapped in for now.
the chart..
i posted a chart a few days back indicating an expected 10 wk low next week. i don't know at what price level that may occur, higher or lower than where we are. prices are in a pause zone. the fundamental fears generated by the subprime/credit problems still appear to dominate trading. various sentiment measures indicate a growing level of pessimism. once the current fears exhaust themselves i believe we will see new highs as the 4.5 yr cycle's uptrend will reassert itself.
here's the daily chart into mid january. i've noted the 10 and 5 wk nests of cycle lows since the aug 07 4.5 yr low. the first 10 wk cycle acts as expected, new highs and right translated. it was 47 days long, right on the button for avg 10 wk sample size of approx 48 days. it also divides nicely into it's two component 5 wk cycles. a rally off the 10 wk low starts and then the we have a failure. during the 1st 5 wk cycle off the oct 10 wk low, prices break down below the oct 10 wk low and drop all the way into nov 26 the exact time window for a 5 wk cycle low. the fundamental effect of the expanding sub prime crisis is starting to overwhelm cyclic impetus. prices rally off the 5 wk low but now have to contend with fundamental effect and an upcoming 20 wk cycle low due in the first day or so of the new year. i was encouraged that prices held above the nov low, were holding well above the aug low, and damage seem contained to the credit sensitive sectors of the SP500 such as XLF and XLY. the first few days of a new year are often wild cards for cyclic analysis as often there is large scale movement of portfolios in or out of stocks. the first 6 days saw a very minor attempt to bottom (right where a 20 wk low should) and then 4 more days down into a reversal bottom. prices consolidate for 3 days and then collapse into the january lows. this sudden collapse IMO was the result of the liquidation of the french Soc.Gen. bank holdings. traders saw it coming and no one was going to bid. that selloff combined with the credit fears have created a cyclic pause zone that the market seems trapped in for now.
the chart..
i posted a chart a few days back indicating an expected 10 wk low next week. i don't know at what price level that may occur, higher or lower than where we are. prices are in a pause zone. the fundamental fears generated by the subprime/credit problems still appear to dominate trading. various sentiment measures indicate a growing level of pessimism. once the current fears exhaust themselves i believe we will see new highs as the 4.5 yr cycle's uptrend will reassert itself.
aire
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