Last weekend I had a bad chest cold and I may have been a little bit too gloomy when looking at the SP500 index charts. I have been looking at the ValueLine Arithmetic Index (VLE) charts this week and the total market does not look in bad shape. Price dropped about 5/8 of the 1987-2007 range but is back near the 1/8 line. I expect resistance at the 1×1 angle but long term the total market does not look as bad as the SPX charts do.
The 2007-2009 bear market has been retraced about 3/4 of the range in less than 50% of the time. I will not be surprised to finally see a correction back to the 50/50 point from here.
The VLE swing chart shows some topping action since September. It is possible the VLE will make a new high here but I do not think it is going much higher without a 90 day correction.
The action in bonds showed a big spike up in yields on Friday after a surprisingly good jobs report. Two things to note here – 1) yield remains in a down trend, and 2) the 1/8 time cycle has changed the trend. Because the 1/8 time cycle is up in a couple weeks, it is possible that yields have hit a low for some period of time.
The US Dollar (USD) also bounced on Friday. But keep in mind that it remains in a downtrend until there are swings higher.
And finally, the S&P Banking Index (BIX) remains near the 1994 level and has shown no real strength during this bounce. I suspect there are a couple more years of pain in the banking sector.
Tags: Banks-Financials · Bonds · Market Outlook · US Dollar (USD) · Value Line Arithmetic Index (VLE)
The SP500 index (SPX) roadmap I have been tracking for several years shows the actual weakness of the market. While it is true the SPX has bounced over 60% from the March low, price is only back to 2004 levels. There will be no Christmas in Whoville this year. The 218 day cycle which worked since 2002 did not greatly affect the market in May and October so this energy may have been overcome by a stronger cycle wave. December 24th is the next cycle turn and I don’t play to be long much going into this date.
The 2002-2007 Gann fan range of the SPX show price butting it’s head against the 1×1 angle. As a general rule, this angle should provide significant resistance to a tired market. The bounce itself remains at the four times slope line which is strong if taken stand alone. But the fact that the market tanked below the 2002 low before the bounce puts the “strong” move into context. Price has not even retraced to one-half of the 2002-2007 range yet.
A larger context picture of the Nasdaq 100 (NDX) shows price at only 25% retrace level of the 2000-2002 bear market. Again, a 70% plus move from the March low was a nice trade. But there is no strength in the long term shown on this chart.
The SPX is moving to 270 days up from the March low. The only real correction lasted about 30 days. Price recently moved through 135 days from the July low. Extended blowoff moves often end 135 days from the intermediate low (90 + 45 days).
Tags: Gann Emblem · Market Outlook
The ValueLine Arithmetic (VLE) Square of 90 using trading days shows price 180 TD beyond the March low. Interesting that the left shoulder of the head-and-shoulders formation occurred 45 days into the second 90 day cycle, the head at the 3/4 time line, and the shoulder finished at the 180 day mark. A new high would negate the H&S but I would not be surprised to see price drop throughout December.
The VLE swing chart shows topping action during the past month. Also note that the high was within one percent of 8 complete square of 9 cycles from the March low. This is another reason not to be surprised if the high is in.
Tags: Value Line Arithmetic Index (VLE)
