ChartsEdge Pattern Recognition posted at ChartLines.com today

Dear readers, for anyone who's just finding out - I (Ariel) have moved my site and blog to my new site name, "ChartLines". It's at www.Chartlines.com, currently at the blogspot that points to. I've posted ChartsEdge there this morning. Still don't have time to go into more detail - will when I can! Meantime, "see you" at ChartLines!

ChartsEdge Pattern Recognition map for equities 2/23 at new ChartLines

Folks - go to my new ChartLines site to see where I've posted today's Pattern Recognition map from ChartsEdge. It was time for me to shift my site over to a name that's more descriptive (not defining in the negative - although the site remains very dedicated to unbiased trading!). All the content and features are there, and that format is the same, though brightened up a bit, and better logo. (I've taken reader comments into consideration on this!)

So come join us over at Chart Lines!

Dear readers - normally I post here Andre Gratian's Turning Points weekend updates, such as report today on the SPX technical analysis, channel trendlines and cycles and what he's expecting for the upcoming time frames. I did post that at the blog under the new ChartsLine name. And decided I should direct you there, to help move along the transition.

So please go there to see that and start participating in the transition of this blog to my new site with the new name. All the historical posts, sites list, etc., are all in place there. And I'm going to start tweeting under the ChartLines identity at Twitter too! Here's the info to find it:

Announcement - I (Ariel) am moving this blog over to www.ChartLines.com under the new name, "ChartLines" (tm). For now, it will point to http://chartlinestrading.blogspot.com and you can find everything there.

ChartsEdge TCI (Trader Confidence Index) and comments

Dear readers - normally I post here Mike Korell's ChartsEdge updates, such as his comments today about his TCI and what he's expecting for Monday. I did post that at the blog under the new ChartsLine name. And decided I should direct you there, to help move along the transition.

So, of course you can find Mike's public post at his ChartsEdge Daily Maps site (see list at right). Or just go to my new site to see that - here's the info:

Announcement - I (Ariel) am moving this blog over to www.ChartLines.com under the new name, "ChartLines" (tm). For now, it will point to http://chartlinestrading.blogspot.com and you can find everything there.

ChartsEdge week-ahead cycle forecasts for equities and gold, 2/22 week

FIRST a personal announcement - I (Ariel) am making transitions that include moving this blog over to www.ChartLines.com under the new name, "ChartLines" (tm). For now, it will point to http://chartlinestrading.blogspot.com and I've started dual publishing to there, this weekend.

AND NOW AS USUAL:

Below are the week-ahead cycle-based forecasts from ChartsEdge. And thanks again to Mike Korell, who's the fellow doing ChartsEdge - and has also provided some additional comments at his ChartsEdge Daily Maps page (link with his comment below) about what his various indicators are showing (based on his Trader Confidence Index, BP and other cycle-based charting). Anyway, here's what Mike Korell is saying and showing this weekend:
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Volumes suggest traders betting currencies turn - just be sure it's true

Volumes in the euro especially, and somewhat in the yen, suggest that currency traders are looking for a turn to occur. Carry trades can occur using whichever currency they think will weaken and provide lower borrowing rates. But that seems a good question right now - of course, it's all relative, including to the calculation reward for investing in the "riskier asset". Let's start with the US dollar index. Friday, it finally tagged the 80.80 level as I'd stated it was likely to need to do. That represents the ABC zigzag, C=A symmetry target. So there's a possibility it's "done" and readying to turn. The euro chart below (FXE) says the same thing - it slightly exceeded its own symmetry target but probably okay on that score as it counterbalanced the dollar index reaching its own. And look at the FXE volume when that happened on Friday!

The huge volume suggests many traders covered shorts and/or capitulated - probably both. With the positive divergence on the FXE chart, it's very reasonable to think the euro/dollar recent trends are about to change. What about the yen (FXY)? Its volumes ticked up modestly as it tested close to its 200 dma. Given it could be a higher low (as the dollar/yen pair tested close to the 92 revised target of Goldman Sachs), this can be seen as an orderly though deep pullback from a leading diagonal that still propels the yen (FXY) to new highs.

Slam-dunk? Not necessarily. Be certain of two things (at least). One, the the US dollar index doesn't want to go to the 50% retracement at 81.90-ish (virtually 82). Also, that all this really DOES turn. The alternatives include that the euro and dollar change from being zigzag pullbacks to further trending - more dollar up, more euro down. This may be less likely, than just having the trend change turn equire more time and turbulence.

Weekend review of analysts around the web discussing the bullish and bearish aspects of the markets

It's time for another weekend roundup looking at what other analysts are saying on different aspects of the markets' technical and sentiment-based outlook! We'll include some of our usual favorites we recommend to readers, plus some others that look good:

Be sure as usual to read Terry Laundry's Saturday update at T Theory Foundation: T Theory Calculations, Daily Updates, Charts and Data (2/20), at http://www.ttheoryfoundation.org/t-theory-calculations.html. Click to see his chart and discussions of course - here's a quote:

The small hike in the discount rate didn't prove a problem and the AD Oscillator continues its strong uptrend from the W Bottom.

It is approaching an overbought state but it usually turns toppy well before the market gets into any serious trouble.

I will make the next post here early Tuesday Morning. On Sunday I will discuss a 10 year chart history for Gold and Interest rate trends at See Recent Posts at bottom of page. For a full review of all posts since January 5 2010 go this link then go to the bottom of the page and scroll back in time: T Theory Foundation

Safe Haven | Technical Market Report by Mike Burk (2/20), at http://www.safehaven.com/article-15866.htm.

Schaeffer's Monday Morning Outlook: Traders Remain Wary Despite Rally; SPX Reclaims 1,100. Here's their intro quote:

The short week got off to a rollicking good start -- the Dow Jones Industrial Average surged nearly 170 points on Tuesday -- and the major market indexes spent the rest of the week padding those gains. The Dow is now just shy of breakeven for the year to date. Looking ahead to next week, Todd Salamone, Senior Vice President of Research, notes the relatively low-key response to the Federal Reserve's surprise discount rate hike, and concludes that traders are still living in a low-expectation environment. Still, Todd thinks we might be in for a short period of consolidation following the recent rally. Next, Senior Quantitative Analyst Rocky White explains the Moving Average Convergence Divergence (MACD), a popular technical analysis tool. One day last week, more than 500 stocks were showing a MACD buy signal. That's happened only four times in recent years. Finally, we wrap up with a look at some key economic and earnings reports slated for release this week.

Carl Swenlin's Decision Point®: Chart Spotlight (2/19/2010), http://www.decisionpoint.com/ChartSpotliteFiles/100219_cspot.html. Here's a quote from one part, but check out his charts, they're worth a look:

Our market posture for the S&P 500 remains neutral; however, our Thrust/Trend Model (T/TM) could generate a buy signal if positive price action can continue and the Percent Buy Index (PBI) can cross up through its 32-EMA.

Marty Chenard's 2/18 piece at Safe Haven | Today's Current Accumulation-Distribution Study..., http://www.safehaven.com/article-15848.htm.

Thoughtful swing trader views, in Steven Cohen or Trader A?; Lessons Learned From Tim Knight | Charts and Coffee (2/19), http://www.chartsandcoffee.com/2010/02/steven-cohen-or-trader-a-lessons-learned-from-tim-knight/.

SentimenTrader - Independent Sentiment Research for the Stock and Bond Markets- Here's their gauge as it appears today, 2/20, at http://www.sentimentrader.com/:

INVESTOR SENTIMENT

Click here for more information

Jesse's Café Américain: Gold and Silver Weekly Charts - Explosive Silver Situation Intensifies (2/19), at http://jessescrossroadscafe.blogspot.com/2010/02/gold-and-silver-weekly-charts.html.

Enjoy listening (but guard against getting overly bearish) - Financial News, Economic Education, Analysis & Data - FinancialSense.com, today at http://www.financialsense.com/

Today's first hour of their audio features:

Carl Swenlin (Technical) President Decision Point Topic: Market Correction Further to Go | Marc Faber Editor Gloom Boom & Doom Report Topic: Stock Market, Gold, Sovereign Debt & Inflation

The Technical Take: Investor Sentiment: Bounce Mode - By Guy Lerner
(2/20), at http://thetechnicaltakedotcom.blogspot.com/2010/02/investor-sentiment-bounce-mode.html.

Market Observation - Brian Pretti 02.19.2010: Is the Glass (Steagall) Really Half Empty? (2/20), http://www.financialsense.com/Market/wrapup.htm.

Bull v. Bear decision point facing stock markets can be analyzed with Objective Elliott Wave: Tony Caldaro's weekend update

Once again the stock markets are at a point where technicians are checking (and debating) whether this is really a bull or bear market. Insights to help discern the difference can cone from Tlliott Qave analysis when it's applied objectively. The Elliott Wave count of the equities markets, typically on the S&P 500 index, is always interesting to puzzle out, and always much appreciated when it's tracked and updated objectively. Of course I'm thinking of Tony Caldaro and his Objective Elliott Wave (and his site is always in the list at right). Here's this weekend's update from Tony's Elliott Wave Lives On site:
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the Elliott Wave Lives On
by Tony Caldaro
February 20, 2010

weekend update

REVIEW

This week the FED increased the discount rate for the first time since Jun 06. This may have been in response to the rising inflationary pressures reported this week, and a message to the banks to increase lending after reports of record declines in lending. Economic reports, in general, were positive. Home starts/builders index was higher, industrial production and leading indicators were higher, and the Philly FED improved. On the inflation front, both the PPI and CPI rose along with import prices. For the week the SPX/DOW were +3.05%, and the NDX/NAZ were +2.65%. The Asian markets were flat, but European markets were +4.4%, and the Commodity equity markets were +3.1%. Bonds were -0.8%, Crude gained 7.5%, Gold rose 2.4% and the USD was +0.3%. Home prices/sales, plus the Q4 GDP revision highlight the next week.

LONG TERM
We start this weekly review referencing the two special reports posted this week: GSC revisited and the Holiday update. Then we'll try to reference the past and relate it to the present and future. In the "GSC revisited" report posted on sunday we examined the theory of a Grand Supercycle and how it relates history. We suggested, based upon an economic cycle in the emerging US economy, that the GSC began early in the 18th century and not with the official Declaration of Independence in 1776. Under this scenario, the US would have experienced five Supercycles (SC) between 1700 and 1929. The two SC peaks, SC1 1770 and SC3 1857, were followed by two major local wars, the American revolution and the American civil war. In each instance the economy contracted about 10% to 20%. When SC5 completed in 1929, however, it completed a much greater cycle: the multi-century GSC. The decline that followed was enormous. The economy dropped nearly 50%, the stock market dropped 89% in only 34 months, and the economic collapse resulted in a major worldwide war. While the US stock market took only three years to bottom after a GSC top. The English FTSE GSC top occurred earlier in 1900 and lasted until 1940, forty years. We also noted some additional technical comparisons in the GSC report. That depression was worldwide.

From 1932 forward the US stock market, as measured by the DOW, progressed in a five wave sequence which is familar to most you. Cycle wave 1 1937, Cycle wave 2 1942, Cycle wave 3 1973, Cycle wave 4 1974 and Cycle wave 5 2007. Some EW pundits have counted the 2000 top, Primary wave III, as the end the of Cycle wave 5. We, however, tracked the five wave bull market from 2002-2007 right on this blog. The charts are still posted in the chartlink. Cycle wave 5 completed in 2007. After it completed it became obvious that it was a very significant top. More aligned with a Supercycle top than just another Cycle wave top. Now, we are fairly certain that it was a Supercycle top, and nothing like the GSC top and collapse from 1929-1932. This revelation has some current and future implications. First, and foremost, we can no longer compare this SC bear market to the GSC 1929-1932 bear market. We had been expecting alternating waves. That expectation no longer applies. Second, we had been expecting a prolonged bear market, similar to 1937-1942, to accomodate the alternation. That no longer applies. Third, we were expecting a retest of the 2009 lows or lower to complete the bear market. That is still possible but we now have to look at other possibilities as well. This bear market is nothing like the depressionary 1929-1932. In fact, neither China nor India even entered into a recession during this worldwide economic contraction.

After tracking the five wave bull market from 2002-2007 we turned long term bearish in early Jan 08. We expected an ABC bear market. All bear markets unfold in ABC's. As the waves unfolded we observed five waves down into Mar 08, a three wave rally, and then another five waves down into Mar 09 to complete a three wave zigzag. At this point we labeled the completed wave structure as Primary wave A and suggested a 50% retracement rally would be next. A few days after the low we projected a target of SPX 1122 (50%) within the range of OEW 1107 and 1179 pivots. In essence we had turned medium term bullish, but remained long term bearish under the wave alternation scenario. The market rallied in three waves, for ten months, and topped at SPX 1150 in Jan 09. Just before the top we had a long term uptrend confirmation from our quantitative OEW. These signals are quite reliable. While some of our other indicators were also flashing bullish signals we made the decision to track the next downtrend carefully. Since there were only a three waves up from the Mar 09 low, and the market had followed our expectations. A resumption of the bear market would be signalled during the next downtrend, with impulsive waves to the downside. Thus far, that has not occurred.

This downtrend is now about four weeks old and the waves thus far look corrective, not impulsive. Corrective downtrends occur during bull markets, or bear market rallies, not in the resumption of bear markets. Since we no longer require wave alternation between the 1929-1932 bear market and present. And, we no longer require anything more to the downside than what has already occurred, see "Holiday update". We can technically count the decline from Oct 07 to Mar 09 as the entire three wave bear market, if we can count the two uptrends from Mar 09 as impulse waves. In the SPX this is quite difficult to do with out major creative wave counting. In the DOW, however, it is not that difficult, and we posted a bullish count on the charts. In review of some of the other technicals we follow. We observe that, unlike the US, and we posted this in early Jan 10, nine of the thirteen foreign markets we follow already have bullish wave structures. At the Mar 09 low this market was the most oversold it has been since the early 1930's. Plus, the last factor we noticed this week was the four-year cycle.

There have only been three times when OEW has confirmed a long term uptrend in a four-year cycle low year: 1950, 1954 and 1958. All three led to multi-year bull markets. On each occassion the four-year cycle low arrived one year early. Prior to that it was in sync with the waves, and in 1962 it synched up again. The 1950's, btw, was also a time when Debt/GDP was over 100%, and the FED fixed rates low while allowing inflation to aide economic growth. It appears in many ways we've been through the current scenario, with some variations, before.
    
Let's sum this up. We currently have two potential counts. The one we have been posting since early 2008: Oct 07-Mar 09 Primary wave A, Mar 09-Jan 10 Primary B, and Primary C now underway. This is still possible, since we are still in a downtrend, and there are only three waves up from Mar 09. The second count arises after all the recent research into GSC/SC waves, cycles, etc. It suggests, and is posted on the DOW charts, that the bear market ended in Mar 09. The anticipated 50% retracement rally, was actually the start of a new 70-80 year SC bull market. The three waves up, thus far, are only Major waves 1-2-3 of Primary wave I of Cycle wave I of this bull market. Should the current downtrend conclude with alternation with the Jun/July downtrend, and hold the 10% correction threehold, it will be labeled Major wave 4 with Major wave 5 to follow. For now we'll continue with the SPX count as the primary count until this downtrend concludes.

MEDIUM TERM: downtrend
After a six month uptrend July 09-Jan 10 the market entered a downtrend on Jan 19th. This, we anticipated at the time, was the most important downtrend since the final downtrend into the Mar 09 low. If it was impulsive we could assume the bear market has resumed. If not, the potential was there for higher highs in the months ahead. On the hourly charts we could observe impulsive waves from SPX 1150-1072, a rally to 1105, then another impulsive wave to 1045. We counted it as a i-ii-1. However, on the OEW charts, we noted that the decline really didn't look that impulsive at all. It looked more like a zigzag than a i-ii-1. As the market started to rally from the SPX 1045 low, it continued to retrace more and more of Minor wave 1. By this thursday it had retraced that entire decline when the rally hit 1108. This increased the expectations that a zigzag had formed between SPX 1150 and 1045. We are also considering an additional count of a Int. wave i and an irregular Int. wave ii. Zigzags are formed by two implusive waves with a counter rally in between. They are not impulsive waves because impulsive wave require five internal waves not three. This downtrend then is not what was expected to resume the bear market. It looks more like a correction in an ongoing bull market.

SHORT TERM
Support for the SPX is at 1107 and then 1090, with resistance at 1133 and then 1168. Short term momentum is displaying a negative divergence on the hourly charts and is a bit overbought on the daily charts. The decline from SPX 1150 to 1045 was 105 points and 9.1%. The decline in the DOW was 8.3%. We noted this near the lows because we had observed that at no time during the 2002-2007 bull market had the DOW corrected more than 10%. During the bear market that 10% threshold was broken quite early. Yet since March 09 the only correction prior to this was Jun/July: SPX -9.1% and DOW -8.9%. From the Feb 5th low at SPX 1045, the SPX has already rallied 67 points and retraced 64%. This is generally considered about the maximum retracement for a counter-rally during a downtrend. If the SPX clears the OEW 1107 pivot range then we would suspect that the low for this downtrend was at SPX 1045. Ideally, the SPX should top soon and turn lower to, at least, retest that 1045 low or lower. This would give us more information about this downtrend. Plus set up a potential alternation between the Jun/July correction and this one. The inflection point, we spoke about last weekend, has been resolved to the upside. The next decision for this market is bull or bear. Best to your trading!

FOREIGN MARKETS
The Asian markets were flat on the week with China closed. Hong Kong lost 1.9% and the rest were slightly positive.
The European markets had a good week +4.4%. All were within a +4.0% to +4.6% range. The SMI confirmed another uptrend.
The Commodity equity markets averaged a +3.1% week.

COMMODITIES
Bonds dropped 0.8% on the week. Rates appear to be in another uptrend.
Crude rallied for most of the week gaining 7.5%, despite a rising USD. It has rallied $10 in two weeks.
Gold gained 2.4% on the week, as Silver +5.0% led gold higher.
The USD gained 0.3% in a volatile week. The EUR lost 0.1%, (certainly appeared worse), and the JPY lost 1.7%.

NEXT WEEK
Tuesday kicks off the week with Case-Shiller and Consumer confidence. On wednesday we have New home sales, then on thursday the weekly Jobless claims and Durable goods. Friday ends the week with the first revision to Q4 GDP, Consumer sentiment, Chicago PMI and Existing homes sales. As for the FED. On wednesday FED chairman Bernanke gives testimony to Congress in his Semi-Annual monetary policy report. Then he testifies before the Senate, same subject, on thursday. On  friday FED governor Tarullo heads a panel discussion in NYC. Best to you and yours this week. It should be an interesting one.

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987

Opex Friday caps benign time, now be alert for potentially worrisome markets: Ray Merriman's preview for 2/22 week

Want to hear from someone who predicted markets' positive moves this week? Raymond Merriman's financial astrology-enhanced analysis of the cycles in equities, bonds, currencies and commodities are always fascinating. Here's his set of public preview comments for the upcoming week, from his site at Merriman Market Analyst MMACycles Weekly Preview Comments:
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MMA Comments for the Week Beginning February 22, 2010
Written by Raymond Merriman

Review and Preview

World equity indices rallied most of last week, following their troughs (lows) of the week before. However, the rallies weren’t large enough to confirm the lows of February 5-9 as primary or greater cycle troughs. On the other hand, if these rallies continue for two more weeks, then they will probably confirm the lows of early February as not just primary cycle bottoms, but even the 50-week cycle trough. Thus, stock indices are in a very important stage right now.

In Asia and the Pacific Rim, the rallies were quite mixed. In India’s Nifty and Hong Kong’s Hang Seng index, the rally from the prior week lasted until Wednesday, February 17. In Australia, the high of the week fell on last Thursday. In Japan, the Nikkei topped out Friday, but then it sold off somewhat sharply to close near the low of the week, following the announcement of the increase in the Fed discount rate.

In Europe, the stock market was bullish all week. Each of the four major indices we track topped out on Friday, February 19.

In the Americas, the Dow Jones Industrial Average, NASDAQ Composite, and Bovespa of Brazil all made their weekly highs on Friday. The Merval of Argentina made its weekly high of Thursday. There is nothing yet to indicate that the rally in any of these markets is completed. In fact, the translation of Venus and the Sun over the former Jupiter-Neptune conjunction remains in force through this week. As discussed before, these translations are in effect February 8-28.

Crude Oil has rallied in concert with stocks. The prior week found Crude prices down to 69.50. Last week saw prices back up to 79.95. Gold and Silver also rebounded from their lows of the prior week. In Gold, the high of the week was realized on Wednesday, but Silver continued higher in to Friday. However, currencies did not fare too well against the Dollar. The Euro currency, for instance, traded below 1.3500 during the day on Friday. This is most unusual, for precious metals and currencies tend to move together. But now, we see them decoupling. Gold and Silver are moving up against all currencies, which suggest something may be developing on the geopolitical front that is causing investors of all nations to demand more Gold and Silver. Maybe that something has to do with the progress of nuclear development in Iran.

Short-Term Geocosmics

The movement up in stock indices last week was not unexpected according to the principles of Financial Astrology. As discussed previously, the geocosmic signatures of February are quite benign, with first Venus, and the Sun, forming conjunctions to Neptune and Jupiter. The last of these “soft” aspects will happen next week, as the Sun will form its annual conjunction to Jupiter on February 28. Three days later, on March 3, Venus will form a conjunction to Uranus, which is more powerful in terms of stock market correlations. In fact, Venus and the Sun will both now start a translation to the Saturn-Uranus opposition. These translations will be in effect March 3-21. If we add the square to Pluto into the mix, it will last through March 25. One would anticipate that the period from March 3-25 will be entirely different in focus and market performance than February 8-28. The February period was benign, while the March time band may be much more intense and worrisome. After all, February highlighted the exuberant and hopeful Jupiter-Neptune dynamic. The March period will highlight the Saturn-Uranus-Pluto dynamic, which instead of being hopeful, has a stronger association with matters like debt, taxes, and “the unexpected.” In the context of “the unexpected,” there may be a slew of incidents involving nature, like high winds, electrical storms, and even earthquakes or volcano eruptions. It will mark the most powerful combination of geocosmic signatures in effect so far this New Year.

Longer-Term Thoughts

I received some mail last week about my column in support of the Federal Reserve Board. It isn’t so much that I support the FRB as I support the leadership of Ben Bernanke. It really doesn’t matter so much (to me) which entity controls our nation’s money, as it does the integrity and honesty of the individual in charge of that role. But it is hard for me to conceive that anyone who is under the control of elected officials (White House or Congress) can be free from an inherent conflict of interest to the American people. Elected officials will tend to make decisions – or demand the Central Bank make decisions - that will enhance their chances of re-election, which may not always be in the long-term best interest of the nation and its economy. For instance, it is seldom popular to raise interest rates, and very few politicians would go on record to support an increase in interest rates.

Yet, every time the economy comes under pressure, politicians are quick to point the finger at the Central Bank. The Federal Reserve Board was blamed by many politicians for the financial panic in September 2008 because it oversaw a very soft and accommodative monetary policy in the middle years of this decade. Yet it could just as easily be argued that it was the lax regulatory policies of the government itself over Fannie Mae and Freddie Mac that allowed for such risks to be taken b y banks, causing so many people to enter into mortgages they could not afford.

It is important to bring these issues up now, because the geocosmic signatures of next month – and even into early 2011 – suggest these themes are about to explode again. The Federal Reserve Board can only control the dangers that they can foresee. The problem is that crises in banking occur where no one expects it to happen (well, afterwards, of course, everyone claims they saw it). But we know that Pluto in Capricorn - especially in the waning phase of the Saturn-Pluto cycle – pertains to financial crises related to out-of-control spending and hence debt explosions. Things can look rosy temporarily, but in fact spending and debt levels are not going down, and debt related problems will continually rise again to confront bankers and politicians alike. I suspect we will see this in March when 1) Mars goes direct, and 2) Venus and the Sun will translate the Saturn-Uranus-Pluto T-square.

Mars retrograde is very interesting in terms of military actions too. In the past week, the USA has launched its new Afghan military initiative in the southern part of that country. The initial reports are very encouraging, which is what one would expect under the transit of the Sun and Venus to Neptune and Jupiter. As mentioned in a recent column, Barack Obama will stage a comeback in popularity during February, and he has. But Mars is retrograde, and usually this means that the aggressor will encounter more resistance and difficulties than anticipated. It will be with great interest that we watch the developments in Afghanistan when the transits to Jupiter and Neptune end, and the translations to Saturn-Uranus-Pluto begin, with Mars retrograde and about to go stationary direct (March 10). I think at that time we will begin to see if the new surge in Afghanistan is really a success, or on course to becoming another Viet Nam-like situation. We may see whether President Obama really is an effective commander in chief too. Right now it is hard to call. The start of the new military campaign started under a new moon and favorable fast-moving transits, which are positive. But it also started under the slower moving Mars retrograde, which to an astrologer is usually not the best time to launch a new war effort. It is a better signature to launch a peace initiative, and if there is one thing I would suggest to President Obama at this time, it would be to call together a summit of world leaders who truly want to end the threat of terrorism – who would form a powerful coalition against terrorism and sponsors of terrorist activities with the goal towards world peace. He could do it, and in my opinion, this may be his true calling in life. But he can’t do it alone, he can’t do it via twitter or a teleprompter where he speaks in front of large groups of fans in contrived photo opportunities, and he can’t sit back waiting for others to invite him to their summits. He needs to initiate the call, organize the event, and bring the leaders together by personal invitation. In my opinion, he needs to do this within the window of opportunity while Uranus and Jupiter are still in Pisces, which is in effect off and on for only the next year. After that, it is “Aries time,” potentially a time of wars and major disputes – unless these matters are addressed and agreed to before then.

Announcements

The monthly MMA Cycles Report and its companion – the MMA Japan Cycles Report – will come out this week, Monday and Tuesday, via posting on our web site for subscribers. This report covers our longer-term analysis of the U.S. stock market, precious metals, crude oil, currencies, Treasury Notes, and grain markets. For subscription information, please go to SERVICES at www.mmacycles.com.

Our next private meeting for MMA subscribers will take place at the Hyatt Regency Hotel in Cambridge (Boston) Massachusetts, on March 1 at 11:00 AM. There is no cost for yearly subscribers of MMA or SOS reports, or for any subscribers of our daily or weekly reports. For all others, the cost is $295.00. This special meeting will last about 2-1/2 hours. It will follow the NCGR conference on “Planetary Revolution: Geocosmic Alchemy II”, taking place February 25-28. Attendance is limited to about 15 persons, and reservations are suggested. There is nothing as exciting and informative as a gathering with MMA subscribers (to me), because they come from very interesting walks of life, from the fields of finance, banking, government, military, intelligence agencies, academia, psychology, internet technology, and astrology. During this special gathering, subscribers may ask any questions they wish, or they may make any statements that the group may then discuss. Great trading ideas tend to arise from this format. Please contact us at 1-248-626-3034, or email us at ordersmma@msn.com if you would like to be a part of this special meeting, as seating is limited. For information on what these meetings are like, read a review of my winter tour of Europe, where I met several subscribers at two separate meetings, in Amsterdam and Zurich.

Please note that I will be giving two lectures in Arizona in March. The first will be Friday, March 12 in Tucson, 7:30 – 9:00 PM. Please contact 520-625-5762 or gaelchi@dishmail.net for reservations and location information. The second will take place in Scottsdale, Friday, March 26, 7:00 – 9:30 PM. Contact 602-952-1525, or as aboard@azastrology.org for reservation and location details. The title of the presentations will be “FORECASTS 2010 AND THE USA ECONOMY.” These presentations will discuss the importance of the “Cardinal Climax,” an unusual planetary pattern that will be in force 2008-2015, with its strongest astrological set up taking place in the summer of 2010. This set up affects the charts of the USA, Barack Obama, and the Federal Reserve. As each of these entities undergoes radical changes, it will also correspond to powerful movements in financial markets and the world economy. This is a year in which tremendous profits, or losses, can be realized, related to Jupiter conjunct Uranus cycle which begins in 2010.

If you are an active short-term trader, you may be interested in our Weekly or even Daily Market reports with short-term trading recommendations. It is the only way I keep in touch with traders on a daily or even weekly basis, as I no longer offer personal consultations. These reports give in-depth analysis of the DJIA, S&P and NASDAQ futures, Euro currency (cash and futures), Swiss Franc, Dollar/Yen cash and Yen futures, T-Notes, Corn, Soybeans, Wheat, Gold and Silver. The daily reports cover all stock indices listed above, as well as futures in Euro, T-Notes, Soybeans, Gold and Silver. Subscription to the daily report also includes the weekly report. For more information, go to http://www.mmacycles.com/services, or call our offices at 1-248-626-3034. In the words of one of our subscribers: “I recently subscribed to your weekly report and am finding it to be excellent and a very useful companion to the MMA Cycles Report. I can't imagine now managing my investments without them.”

CD’S, MP3’s, DVD’S, and webcast viewing of the Forecast 2010 speech will be available in about a week. The Forecast 2010 Webcast Speech took place December 20, 2009. We are offering a CD or MP3 download that contains the audio only. You can also view the webcast again in it’s entirety as a one-time download from Vibation until January 25, 2010. And it will be available in a DVD edited edition too. The cost for any of these recordings will be $45.00 and an additional postage charge if ordering in audio CD or edited DVD format. For further information, go to our website at www.mmacycles.com (it will be up sometime this week). Or drop us an email (ordersmma@msn.com) or fax (248-538-5296), or call us at 1-248-626-3034. “Thank You - it’s very thoughtful and thanks you for sharing your knowledge. A whole new world opened for me.” Attendee to the Forecast 2010 webcast.

The Forecast 2010 book are out!!! For more information, visit our web site at www.mmacycles.com. “Kudos… the 2010 forecasts – you’ve outdone yourself - I see Jupiter is playing a role not anticipated (if I recall correctly) last year .... it all clicks.” RR, Santa Fe

The MMA Catalogue of products and services for 2010 is now out!!! You can download it in PDF at http://www.mmacycles.com/option,com_docman/task,doc_download/gid,161/Itemid,63/. The ordering page is the last page of the catalogue. This is especially useful for those outside of the USA, since we do not send these by snail mail unless requested.

MMA is currently preparing a listing of astrology books on its web site for readers to consider in their education of this unique study. The initial offering can be seen on our web site at www.mmacycles.com, under Astrology Books.

Disclaimer and Statement of Purpose

The purpose of this column is not to predict the future movement of various financial markets. However, that is the purpose of the MMA (Merriman Market Analyst) subscription services. This column is not a subscription service. It is a free service, except in those cases where a fee may be assessed to cover the cost of translating this column from English into a non-English language.

This weekly report is written with the intent to educate the reader on the relationship between astrological factors and collective human activities as they are happening. In this regard, this report will oftentimes report what happened in various stock and financial markets throughout the world in the past week, and discuss that movement in light of the geocosmic signatures that were in effect. It will then identify the geocosmic factors that will be in effect in the next week, or even month, or even years, and the author’s understanding of how these signatures will likely affect human activity in the times to come. The author (Merriman) will do this from a perspective of a cycle’s analyst looking at the military, political, economic, and even financial markets of the world.

It is possible that some forecasts will be made based on these factors. However, the primary goal is to both educate and alert the reader as to the psychological climate we are in, from an astrological perspective. The hope is that it will help the reader understand these psychological dynamics that underlie (or coincide with) the news events and hence financial markets of the day.

No guarantee as to the accuracy of this report is being made here. Any decisions in financial markets are solely the responsibility of the reader, and neither the author nor the publishers assume any responsibility at all for those individual decisions. Reader should understand that futures and options trading are considered high risk.

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ChartsEdge Pattern Recognition map for equities 2/19

Welcome to opex Friday! Here's the Pattern Recognition map for today from Mike Korell and his ChartsEdge Daily Maps at http://www.chartsedge.com/wp/:

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ChartsEdge Pattern Recognition

Posted: February 19th, 2010 | Author: Mike Korell |

Filed under: One-Day Market Map | No Comments »

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Folks, between the Olympics, special projects, and this market bucking many expectations about hhow it would manifest the bounce this week - I'm totally beat! But if you took the common swing approach to buy on Tuesday - even at the 1:00 "low" - you are doing all right. Recently the market has been a buy-on-Friday affair as many have noted. But with the 1107 SPX test yesterday and the overly bullish sentiment as measured by SentimenTrader's gauge (which I posted at the UBTNB3 blog that "feeds" over at right), this may not be one of those Fridays.

We've got the late month time frame which is often weak - the mutual fund manager's tine to buy often around the 26th of any month, just a general tendency that's all. The overly hot sentiment. The cyclic lows that Andre Gratian, Jim Curry, and even Ray Merriman, and maybe others. are expecting to be around this corner. As for Terry Laundry - he's pointing out that the SPX needs to get support around 1095. Can't disagree with that!

Tony Caldaro's Objective Elliott Wave counts have a couple or perhaps three versions just allowing for the uncertainty right now about what this market can pull off. But generally expecting some pullback before anything else really big.

For myself I'm looking to see how it all fits together and wondering if and when events like Treasury bonds dropping will shake equities. There are some who think bonds aren't ready to make a big mice down yet - and perhaps they're right if it'll be equities that drop first and put the scare on that pushes bonds up for a couple more weeks - will see.

Since the futures don't always put a lock on the market cash action we can't assume the SPX will lose 1095 support. We kinda think it will ... But it's always good to remain a bit on the edge to have and keep an edge. So we won't get complacent, either way. The dollar poked higher and the euro lower as I expected (and the yen lower as GS expected) - so even there, it's a matter of "what now"?! Either the dollar sinks and equities, oil, gold, and pretty much all else (well probably not bonds) all fly higher. Or the correction gig isn't over yet, and the dollar probes higher than a lot of people want or expect to see.

So careful out there as always - and happy market navigating!

Euro almost done or not?! Factors to consider

Tonight the SPX futures (ES) are down 10+ points, suggesting the SPX cash index may fall under the 1096 midline of Terry Laundry's "T Theory" channel. This seems to accompany the euro falling into a low target point with positive divergence on the daily ... or is it something different? My monthly chart of the euro, $XEU, still warns that it can trace a continuation down as the wave C of a very large wave 2. The .618 retrace level it could reach may be down to around $112. That's much lower than many are expecting! I'm not saying that's locked in stone. But I'm just saying, it isn't at all guaranteed that the euro is bottoming at a symmetry target right now.

For that matter, gold is weak tonight too, and it isn't immune from more pullback either. I've covered alternative paths for it and won't repeat those here in this post. Basically, we may see the dollar spike some more, with more consequences for the euro and other tradable assets. The most likely time frame is a low next month but that could also push back somewhat into April - will just have to see.

Max pain overrules short-term bear hopes as stocks barrel into opex

This has been a fascinating week even though frustrating for the Elliott Wave folks, and even the ChartsEdge cycles. First Ray Merriman said last Friday that a "sweet" time for Valentine's would usher in a short-term bout of optimism. Then Terry Laundry started showing a small "T" off the bounce from his lower envelope band. Trendline analysts like Andre Gratian and Marty Chenard showed the bounce was from trendline support. And technical analysts showed strength in the A/D, plus sentiment had gotten too bearish. Sure enough, "max pain" took the SPX to Tony Caldaro's 1107 pivot! Expected tomorrow - but it happened today. Maybe just in time, just before the Fed announced raising its discount rate to 0.75% - which seems to be cooling sentiment after hours.

While my time has been eclipsed by some special projects, I can certainly post charts of the SPX, technicals and sentiment that somewhat speak for themselves. The SPX 1108 level tested both the 34 and 50 day moving averages. We've been expecting for weeks now that the better tradable low will come in March. Equities are now trying to scare some into buying lest they miss the boat. Friday might still squeeze a bit more, but after tomorrow which is Feb. 19 - which some believe is a turn date - that leaves at least two, maybe two and a half weeks to see what the next cyclic low will send our way.

It seems unlikely the SPX could mount over its 34 and 50 day MA's without turbulence. Assuming we get a turn coming up, the next question will be whether we get a new low on the next drop. We're expecting a better buying opportunity in March, either way.

The McClellan chart is an example of what we're expecting. The Oscillator has entered overbought territory on this spike, so it's warning that it can roll over again. While the Summation Index has continued curling up, boding well longer-term. After more time passes, it'll be interesting to see what the SI does at its own 50-dma - but there'll be enough time for that.

ChartsEdge intraday cycle map, and swing TCI graph, for equities 2/18

Mike Korell with his ChartsEdge keeps things interesting - thanks again Mike! Today he's providing a Trader Confidence Index (TCI) update for swing traders, plus his BP map for daytraders (remember the BP is a more robust forecast when it synchs up or "agrees with" with his Pattern Recognition map when available, plus today's portion of his weekly cycle-based forecast chart (which you can always locate here too, using the "ChartsEdge weekly" label)). The TCI pointing a high in 1-2 trading days implies that we may see a higher SPX level Friday or Monday. It'll still be interesting to determine whether we're seeing a wave 2 or X (whether or not exceeding SPX 1104), that sends equities to a higher low or lower low in early March, which could target 1030-1050 ... Will see! But back to the ChartsEdge forecasts - From Mike's Daily Maps site at http://www.chartsedge.com/wp/

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ChartsEdge BP Chart

Posted: February 18th, 2010 | Author: Mike Korell |

Filed under:One-Day Market Map | No Comments »

ChartsEdge TCI

Posted: February 18th, 2010 | Author: Mike Korell |

Filed under:One-Day Market Map | No Comments »

I tried to read too much into the TCI chart last time. Best to ignore the small turns.

Goldman Sachs moderated their dollar-yen target - maybe this is why

Recently I noticed a headline about Goldman Sachs moderating their dollar-yen target from 98 to 92. Since that represents only a partial retrace, I was kinda glad to note that target fits better with the yen continuation upward that I'm still expecting (and I believe Tony Caldaro still expects). I chart it typically as $XJY at Stockcharts.com, sometimes as FXY since this ETF tracks very closely (and when I want to see volumes). It moves inversely to the widely quoted dollar-yen pair, so as dollar-yen has moved up closer to 92, the $XJY has dropped again. It's true that $XJY has dropped to the lower Bollinger Band on the daily chart (below), aided by the dollar index' strong up-move overall. But a deep retrace to the prior swing low of 106.83 is still okay, because it looks like it's correcting a leading diagonal up from that prior low. In Elliott Wave terms, it means a deep retrace is common from a diagonal. It could go as far as a double bottom about 107; but it just cannot poke lower than that prior low (106.83). Otherwise the Elliott Wave count would have to change.

On the big picture - see monthly chart below - $XJY is on track to push new highs from a multi-year consolidation. So long as it gets support - either here, the 200-day moving average just above 108, or just above that prior swing low - then it should regain the 111.49 long-term Fibonacci level yet again, and pivot on up to new highs. While my personal EW view of the monthly chart is different from Tony Caldaro's, mine would actually support a higher ultimate target. Still - I do have a bearish alternative if the $XJY cannot regain 111.49. I continue to accumulate on pullbacks (but will bail out / stop out if the prior swing low of 106.83 is violated).

Equities and other markets sending mixed signals mid-week toward opex

The stock market put in a creditable followthrough consolidation day; although indicators look mixed overall, and this gives me enough pause to remember that the ChartsEdge weekly indicated a low on Thursday. Maybe not a lower low, but enough to springboard equities higher on Friday (and opex). Did you realize the dollar moved up today?! I'm still thinking it will eventually test yet higher - meaning that I'm also tilting toward equities weakening after Friday. Will see ... There's plenty of data and analysis to digest. Meanwhile, as the SPX and many tradable indices and assets are testing their 50-day moving averages, gold also mimicked equities after gold's massive push up in recent days. All these moves are probably implementing "max pain", as some analysts noted in reports we listed this weekend suggesting an up week testing toward SPX 1100.

Meanwhile US Treasuries slipped again - no surprise to our readers. I'm guessing it's fueling equities short term. Big question is whether TLT going down will help equities weaken also into early March for the cyclic lows we've been thinking about for awhile. The tone is definitely turning more bullish. But I'm going to remain cautious until we get past that early March time frame. So smoke 'em if you got 'em into opex (maybe we'll get a nice drop tomorrow to buy into Friday - sure hope so!). It's all shaping up for this weekend's analysis to be another must-read batch of new insights. Meantime, happy Chinese New Year of the Tiger, and happy market navigating!

ChartsEdge Pattern Recognition map for equities on 2/17

Thanks to Mike Korell and his ChartsEdge - here's his Pattern Recognition map for Monday. Remember he added a new feature - see his "confidence" level number posted within his notations on the map image, below. Readers know it gains confidence when it "agrees" more closely with his other, weekly and the daily BP maps - hence the confidence number displayed. And you can always keep up with his publicly posted charts and updates (and get subscription information) at his ChartsEdge Daily Maps site page, http://www.chartsedge.com/wp/:
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Big bullish moves today - here to stay? Currencies hold clues

Huge moves by the markets today! 1:00 ET could be seen as a low in the sense that the SPX moved even high afterward! Some are seeing a C=A symmetry at ~1095 if this is a wave 2 up; but we'll need confirmation by followthrough on a wave 3 down IF that's the right count! Readers know that different analysts we're featuring here have differed recently in their projections. For myself, I tend to this still being a correction within a move that has yet to point lower and bottom early March. Let's look at the US dollar for clues.

The daily and weekly of $USD are below. The dollar dropped smartly but not from a clearly peak type top. On the weekly, it's dropped back from MA resistance. But it didn't fully take out the 80.80 symmetry target either. Indicators don't confirm it's downtrending again - at least not yet. It's fair to say the dollar pulled back from being overbought, and technical resistance. This also helped gold power up by $30. But to be consistent, which is to come down - the dollar, or equities? I've already described my skepticism about the wave structure of the dollar, doubting that it's a symmetrical zigzag. I think there remains risk the dollar does probe higher. Partly for cycle reasons. Just as the cycles are likely not finished with equities either. Whatever happens this opex week, I'm braced for equities to move lower afterward. It'll be just as well if the number of bears diminishes this week, to help make another leg down work well in late February and early March.

There are other signs for equities too. The Dow and SPX face resistance at their 50 dma's, and for the SPX there's also resistance at the 1000 level, as well as 1007. The SPX monthly chart's 55 MA is at 1150.56, a sobering fact - so any high as we're thinking in May, will face stiff resistance. But that's for later. Near-term, there's even resistance at SPX 1096/1097.

The dollar ($USD) did lose short term momentum. But its drop is testing its 13-day MA. The MACD is close to rolling over but not a confirmed signal. It remains over its 34-day MA. Its 13-week MA just nudged over its 34-week MA. Yes, these things can change. But they remain reasons to think the dollar isn't necessarily going to roll to new lows, just yet.

Outlook for Feb. 16 and ChartsEdge comment

Readers know we normally have a daily map of intraday cycle forecast from ChartsEdge Daily Maps, http://www.chartsedge.com/wp/. Today, Mike Korell with his ChartsEdge and ChartsEdge Daily Maps has provided the following comment instead:

(Feb16, 2010 - Tuesday) The cycle calculations are presently inverted and combined with a long weekend make synchronizing the daily charts too difficult. Look for a reversal around 1:00 today. It may be a high or a low. Daily charts will be posted tomorrow morning.

Thanks Mike for the info! Folks - while my own personal guess is a low, that can be 100% as Mike points out! Swing traders may as well use other methods like indicators and trendlines, and we'll also see soon enough if and when there's a change in Mike's TCI graph which currently shows a high either put in or very soon. Day traders, pretty much the same, combined with levels. Like SPX 1076 which has become quite a divider, above that being 1082, 1087, and 1092 / 1097. Below being 1068, 1065/1066, and of course 1060/1062, then 1057-1053-1052 (and down under, 1040's and 1030's). Not that we've got any reason to think we even get under 1068 today! But if it happens, remember that Tony Caldaro's support pivot is 1061, with a range of 7 points either way.

Obviously the euro/dollar plays a role, and notice the love affair with gold has flamed up again. I'd like to believe gold is ready to move but not at all convinced the cycles agree so soon. In fact the same probably true for equities. So as opex games heat up, and premium vanishes rapidly, be careful out there. And happy market navigating!

Is the S&P 500 in a bear market AND a bull market? Andre Gratian analyzes in his Turning Points weekly update

Have you been having the feeling that the stock markets are exhibiting both bullish AND bearish signs? Andre Gratian has a startling new take on this, in this weekend's Turning Points update of technical analysis focused mainly on the S&P 500 but also with reference to the QQQQ, banking index, and the dollar. Frankly I'll have to read and ponder this myself! Andre's work must be considered; he takes a very unbiased approach using classic technical analysis together with cycles, Fibonacci work and some thoughts about wave counts, in his Turning Points reports. Andre's website is at Market Turning Points (always included in the sites list at right side of the page here). He provides his weekend updates also to his subscribers, and on occasion at Safe Haven as well. And of course his intraday updates and comments to his subscribers.

Here's Andre's eye-opening analysis:
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February 15, 2010
Turning Points
By Andre Gratian

A 3-dimensional approach to technical analysis
Cycles - Breadth - Price projections
“By the Law of Periodical Repetition, everything which has happened once must happen again, and again, and again -- and not capriciously, but at regular periods, and each thing in its own period, not another’s, and each obeying its own law … The same Nature which delights in periodical repetition in the sky is the Nature which orders the affairs of the earth. Let us not underrate the value of that hint." -- Mark Twain

Current Position of the Market

Very Long-term trend - Down! The very-long-term cycles have taken over and if they make their lows when expected, the bear market which started in October 2007 should continue until 2014.

Long-term trend - Up! We are in a medium-term bull market, which is a corrective move within a long term bear market. This bull market should last until 2011-2012.

SPX: Intermediate trend. Technically, the index is still in an intermediate move until it breaks below 1029.

Analysis of the short-term trend is done on a daily basis with the help of hourly charts. It is an important adjunct to the analysis of daily and weekly charts which discusses the course of longer market trends.

Daily market analysis of the short term trend is reserved for subscribers. If you would like to sign up for a FREE 4-week trial period of daily comments, please let me know atajg@cybertrails.com.

Overview:

Are we in a bull market and a bear market?

One of the first things that confronts a stock market analyst is semantics. How long is short-term? What is long-term? How do you define a bull market? I have that problem right now! So I am going to resolve it by saying that we are probably in a medium-term bull market within a long-term bear market.

I believe that the bear market which started in October 2007 ended in March 2009, and that we are now in a bull market which will last until 2011-12. HOWEVER, this entire bull market will be a corrective wave within a long-term bear market which also started in October 2007 but will not end until 2014, in conjunction with the 120-year cycle low (courtesy of Bud Kress of SineScope).

If we look at the Weekly Chart above, we can now clearly see that the bear market ended in March 2009 by coming out of a (red) bearish channel in June, after completing a 5-wave pattern. At the same time, it came through its 200-DMA. In July, it successfully back-tested its channel line and kept on moving up.

Since then, the SPX has moved in a narrow band in the center of an Andrews Pitchfork (dashed lines) pattern. It’s inability to move to the top of the channel warns that it may break the lower trend line by the time the 4-yr cycle makes its low in the Fall.

In October, the index broke through the long-term trend line which goes back to the October 2007 top, but by then, it was in an overbought state and when it ran into the 200-wk EMA, it was a good occasion to take a breather and pull back to the trend line!

In the process of back-testing the long-term trend line, the index has found good support from the 34-wk MA, and the 50-wk EMA which happen to meet at this time. If that is not enough, the 200-DMA is just below the current low, ready to repeal the rest of the bears, if necessary.

The 4-year cycle which is bottoming in the Fall will probably take us to a lower level, but in the meantime, the 9-mo cycle which helped provide the correction probably bottomed last week and is now adding to the support. Looking back, it has a normal phase of 38 weeks which occasionally varies by 1-3 weeks.

With all this well-defined support, if the SPX trades below the 1029 level (the last short-term price low), we can deduce that we are in the process of resuming the bear market. Until then, we are still in an uptrend.

What's ahead?

Chart Pattern and Momentum

The Daily Chart (below) is very detailed. There are channels within channels, all relevant in analyzing the various trends which make up the main trend. A short-term sell signal was given when the SPX broke out of its bullish black channel from the July low, at the same time breaking the (red) median of the pitchfork.

The black channel represented the short-term trend which started in July ‘09. The trend has now expanded to the green trend channel which started in March ‘09 and represents the intermediate trend. The longer trend is represented by the Andrews Pitchfork pattern. You can see how the trading is currently confined to a narrow band between the dashed lines -- parallels to the pitchfork lines.

In October 2009, the SPX broke out of its long-term down-trend line, traded above it for 13-weeks and pulled back to back-test it. All the support shown on the weekly chart (above) should help make this back-test successful.

Additional support should come from the lower trend line of the intermediate green channel which started in March. We came to rest on its bottom trend line at the same time that we back-tested the long-term downtrend line. The 200-DMA is about 20 points below our recent low, just in case the bears have some fighting spirit left in them.

If my assumption that the 9-month cycle has just bottomed is correct, the trend-pressure should now turn upward and we should already have made a reversal of the decline from 1150. The only near-term challenge left is the bottoming 17-wk cycle (formerly incorrectly labeled 90-day cycle) which is a mighty adversary and should be respected. It is scheduled to make its low about the first week in March. We need to see what kind of an effect it will have on the index before being certain that we have made a short-term low.

We will not have a confirmed resumption of the uptrend until price moves out of the red channel, which would also put it above the 50 DMA. If we do that, with the two cycles at our back, there is a very good chance that we can continue up for another 2 or 3 months. Let’s say that we make a high in May, along with Terry Laundry’s “T” projection. By then, the top green channel line will be above 1300 and could easily accommodate a projection to 1190-1200 if we make a new high.

This will sound like fantasy to the bears but, considering the market position, it is certainly within the confines of technical possibility.

All the indicators are in a good position for a reversal. The lower (A/D) indicator is already leading the way with plenty of positive divergence to the price. The middle indicator, after showing some positive divergence at the low, appears ready to break out of its down-channel. And the top one is on the verge of crossing lines, which would give a buy signal.

Let’s now move to the Hourly Charts of the SPX and of the QQQQ, side by side. Both indices have broken out of their down channels from the mid-January high. The QQQQ is more advanced than the SPX, and closer to moving above its former short-term high. It also resisted the decline much better. This relative strength is bullish for the market. However, the indicators are showing some negative divergence which is especially pronounced in the lower one (A/D), and we could have another pull-back before a good rally gets under way.

Friday could easily have been a much more negative day than it was considering the way it started, and if the intra-day rally which occurred on Friday follows through on Tuesday, the market tone could turn more bullish.

The positive influence of the 9-mo cycle may prevail over the bottoming 17-week cycle, and we could have a clear buy signal before re-testing the lows. Let’s see how it plays out.


Cycles
The 9-month cycle is mainly responsible for the recent decline. It should have made its low on 2/5, exactly 38 weeks from its last presumed low.

The 17-wk cycle -- previously incorrectly referred to as the 90-day cycle -- has been a very dominant cycle. It is estimated that it will make its low about the first week in March.

Longer-term, the 4-year cycle should exert pressure in the second half of the year.

Projections:

Previous projections:
By breaking below 1085, the SPX has given a projection to 1050-1058.
We should also keep in mind that .382 retracement of the move from July to the top is 1043.

- If we break below 1029, the next projection is 970.
- A normal test of the highs would take us up to 1130-35.
- A resumption of the uptrend could reach 1190-1200.

Breadth
Note the difference between this week’s NYSE Summation Index (courtesy of StockCharts.com) and last week’s. The RSI is now at the level from which it normally reverses. It also shows some subtle positive divergence to the index. This is more evidence that a bullish scenario is developing. However, since the index made a new low along with the market, it may be a warning that the coming rally will be confined to a test of the highs.


After showing some positive divergence at the last low, my daily A/D indicator is on the verge of giving a buy signal, but has not yet done so. A strong advance on Tuesday would probably clinch it.


Something that has bullish implications occurred on Friday: the SPX opened lower, and in the first hour was down 15 points with net declining NYSE issues of -2108. That was the low point of the day. By the close, the index was still down -2.96, but the A/D closed a positive 172. Such a rapid A/D recovery from a very negative number of issues in the first hour is unusual and I don’t recall ever seeing it before. It smacks of accumulation and adds to the list of bullish signs appearing at this level.

Market Leaders and Sentiment

The long-term sentiment indicator (at left, courtesy of SentimenTrader) continues to show readings that do not support a bearish view of the market.

While the short-term sentiment indicator on the SentimenTrader is neutral.

It matches the position of my indicators which are a little overbought short-term but are developing a bullish longer term condition.

On the left, above, is a chart of the Banking index. It did not participate in the decline to the extent that the major equity indices did, and its indicators are in a position of giving a buy signal. If it holds above its recent low and breaks out of its short-term decline pattern, it is very likely to make a new high to about 53 (pink line).

On the right, is the UUP dollar index. It just completed a rally to its projection which almost retraced .382 of the last phase of its former decline into the lower confines of overhead supply.

Both indices are leading indicators for the stock market. The UUP, reversely so.

Summary

By declining to 1044.50, the SPX has retraced almost .382 of its up-phase from July 2009. This was most likely engineered by the bottoming 9-month cycle at a time when the equity indices were very overbought and needed a correction.

The 9-month low is now most likely behind us, but the 17-wk cycle is due around the first week in March and could prevent a full-scale reversal until it has made its low.

After the second cycle has bottomed, the index should experience a recovery which could lead to about 1135, minimum, in a test of the highs, or even to a new high before the 4-year cycle begins to exercise downward pressure into the Fall.

Andre