Airedale, not too pretty a chart is it. But my phasing is consistent with the underlying trends exhibited going back to my last 18M low in July 06. The first 20W cycle out of that low was highly right translated and had a much higher low, as you would expect coming out of an 18M low. The next 20W (March 07) was still right translated but there was a pronounced sell off into the low which took it down to almost the level of where the cylce started. This was expected because the 9M cycle had turned down and the 18M was topping. The third cycle was barely right translated and the Aug. 07 low was just a few points above the Mar. low -- evidence that the underlying trend had turned from positive to flat. We would expect the next and final 20W cycle to be left translated with a lower low -- and that is exactly what we are getting. I do not believe we have to resort to fundamental events to explain what has been occuring since the July 07 low, although, as I have said before, I do believe the numerous interest rate cuts since 9/07 were intended to, and have, propped up the financial markets and postponed the 4.5Y bottom in the SPX.
I am not phasing down to the 2.5W level on the SPX at this time because I think the larger cycles are dominating the SPX right now, making cycles of 5W and lower very difficult to phase. I am phasing equities down to the 5 and 10 day cycles, and trading some of those.
If there is a substantial rally in the SPX in the next week or two, I may short it on subsequent weakness, in anticipation of my long awaited 4.5Y low.
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