AI
Saturday, June 01, 2013 12:09:43 PM
SPY review: target of 167.0-170.0 was explained in preceding post. Target was achieved, followed by trendline breaks and consolidation. The breakdown Friday suggests that the seasonal downmove is in play, and the best plan may be to hold shorts through Sept, with Oct being a probable point for the low but too early to call. Holding shorts in SSO as an experiment, instead of longs in SDS; shorts in leveraged etfs should be profitable through a choppy period, whereas longs are not. Since this seasonal decline will not be a straight line, I hope that short SSO is more profitable overall than the alternative.
****************************************************************
The weekly chart shows trendline support near 160, and that 153.50 is a CRITICAL area. High RSI in prior weeks increases the odds for a substantial pullback. The low in April may be the 26 week low, which would then call for a low in late October.
*****************************************************************
The longer term daily gives support from 159.70-161.0.
******************************************************************
If the trendline at 160 is decisively broken (several days), then the top of the 18 month cycle is in place and the decline will seek the low for the 18 month cycle. Note that the overhead trendline through the THREE high closes is near 165.50, and should contain any rally.
******************************************************************
The 18 month low hit in Nov2012 and the next low would be due in May2014, with a 9 month interim low due in Aug2013. Since the LT cycle has 2 shorter cycles within, a bull mkt will continue with highs at the second shorter cycle but end the move on the high of the first shorter cycle. This is where we are now, and confirmation would be the breaking of the TL at 160 area.
The 4.5 year cycle would suggest a low in Oct2013 with considerable latitude and the conclusion has to be that the current/pending decline will be substantial with an endpoint unknown as of yet.
****************************************************************
The weekly chart shows trendline support near 160, and that 153.50 is a CRITICAL area. High RSI in prior weeks increases the odds for a substantial pullback. The low in April may be the 26 week low, which would then call for a low in late October.
*****************************************************************
The longer term daily gives support from 159.70-161.0.
******************************************************************
If the trendline at 160 is decisively broken (several days), then the top of the 18 month cycle is in place and the decline will seek the low for the 18 month cycle. Note that the overhead trendline through the THREE high closes is near 165.50, and should contain any rally.
******************************************************************
The 18 month low hit in Nov2012 and the next low would be due in May2014, with a 9 month interim low due in Aug2013. Since the LT cycle has 2 shorter cycles within, a bull mkt will continue with highs at the second shorter cycle but end the move on the high of the first shorter cycle. This is where we are now, and confirmation would be the breaking of the TL at 160 area.
The 4.5 year cycle would suggest a low in Oct2013 with considerable latitude and the conclusion has to be that the current/pending decline will be substantial with an endpoint unknown as of yet.
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
