Stocks and corporate bonds flirt with Fibonacci, geomagnetics and time cycles

Some combination of bullish Apple (AAPL) and the Fed (FOMC today) push stock indices higher again. Starting during the noon hour, stocks anticipated by rising and then strengthened yet more after the Fed announcement. Interestingly the SPX went right to 1327, a level that was suggested by Fibonacci analysis I described back in November. If it tries higher, there's another even more interesting level - 1332, which is two times the 666 which SPX touched back in March 2009. The exact level was about 666.79 so twice that is somewhere around 1333 to 1334. But there's a Bradley turn date coming up on January 28 - normally a time I'd expect a low, because it's around the "fund manager special" end-month time that usually gives us a lift into the new-month new money that we'd expect the first several days of February. It isn't a major Bradley date, but there are cycles reasons to brace for a reversal to occur anytime soon.

One of those is suggested by geomagnetics work done by John Hampson, as shown in his MT Stock Market Model showing a full 2012 year forecast. This work in his MT Model is based on geomagnetism plus Bradley turn dates and new/full moons, and you can study it at his website at: http://amalgamator.co.uk/MTStockMarketModel.aspx.

Another is Fibonacci - one of the Fibonnaci time cycles work I've done is to take the 17-month decline from October 2007 to March 2009 (interesting in itself as two times 8.6 months, where 8.6 may be a basic time interval), and project highs at the 1.382, 1.618 and 1.786 projections - all of which did occur during 2011. This month, January 2012, is the 2.0 time extension, which I originally thought could also produce a high. Later I'd become concerned that it could be a low, based upon a certain view about cycle lows from Terry Laundry's T Theory, but that clearly didn't happen. Instead, the cycle high projected by Jim Curry for this time period seems to be converging with this Fibonacci time extension.

The idea of this month being the 2.0 time extension also means it's possible to see a high-low-high/low-high cycle playing out, based on the 17-month time periods. If the 17-month period retains predictive strength going forward, then it may point to a significant low (or high, but I'm guessing low) in June 2013.

The big question of course is whether stocks are topping out for a big move down, or just positioning for a pullback before another thrust upward. Honestly I can see it either way. The bullish percent for Nasdaq is getting overbought with a little negative divergence, and there's negative divergence in the McClellan Oscillator (for NYMEX and SPX) too. The Nasdaq is leading both SPX and the Dow Industrials by having exceeded its 2011 highs, but that might also be negative divergence among the indices. Near-term, I think we just need to see if the SPX makes it past 1327 (bullish if 1327 becomes support), or goes under 1307 (bearish).

At least, it look prudent to keep on watch for a potential reversal, which is what I recommend that KI$$ investors and swing traders do here.

If you're looking for a turn in something, check out high-quality corporate bonds. You can see below that corporate bonds have also continued to perform very well. Both LQD, representing high-quality bonds, and HYG representing high-yield corporate bonds, have continued bounding upward. LQD has now already exceeded its P&F projection, and HYG now has a new higher P&F target (114) based on its breakout. There is some negative divergence, however. Look especially at the LQD monthly chart - the StockRSI indicator is retesting up to its midline. When this occurs as price is tagging new highs, it is a warning and possibly a preliminary sell signal. It would be prudent to give it another day or two and look for price to close in the lower third of a daily range and below the low of the prior day that tags a high.

As part of this view, I'd like to note that LQD rose above the 109 price that was a Fibonacci extension, and then tested it as support before resuming the current rise. If LQD moves back under 109 on the next drop, it will be an important signal that it will have lower levels to test.

A-Z financial market forecasts for 2012: stocks, gold & silver, currencies, bonds, oil & more

Happy New Year 2012! Here's a review of forecasts across the financial markets, and we'll cover what we and our go-to featured analysts are seeing; as well as a review of other analysts and approaches that we think our readers will appreciate. Browse these now, and bookmark this post to refer back to from time to time. Odds are you'll even find some ideas and approaches that you may want to give more attention to in the future. The chart first at right here is actually from a cycles projection by Jim Curry (back in Feb. 2011 and still very telling for 2012!), and I'll discuss it in more detail later below. My own general views are based on Fibonacci time and price projections as well as my understandings of Elliott Wave and cycles. These have me bracing for stock market weakness in January, a rise (lower high?) into March, lower again in the summer (June-July), and then I'm less certain right now about a potential rally into late 2012. For KI$$ investing, I've just gone long again on gold and silver, so long as they respect last week's lows, and that should last most or all of 2012. Crude oil could turn bullish, but unless it strengthens fast, I'm tilting bearish on it because it could retest not only the $85 area but even down to $62/65. I'm bearish the euro as it could head toward a Fibonacci retrace level around $112 $XEU. The dollar is tricky because I do expect it to strengthen further, despite the efforts to push it lower; but at some point it may destabilize downward (fueling gold most likely); we'll assess that once we see how it reacts after a rally of perhaps 10%. But since my views are informed by also surveying the contributions of others, let's see what these talented analysts have to offer! For some I'll indicate or include their forecasts; others I'll include as resources.

"A" is for Andre Gratian whose Market Turning Points update we're glad to share each weekend. He's been referencing long-term cycle lows the stock market is heading toward bottoming around 2014. I'll post his next update Monday, so check back to get all his current think on stock indices, the dollar, bonds (TLT) and gold (meantime you can see his most recent update posted here on December 26).

"A" is also for Afraid to Trade, a site by Corey Rosenbloom at http://afraidtotrade.com with his blog at http://blog.afraidtotrade.com. This weekend he's showing a very interesting chart analysis of Google (GOOG) at that blog.

"B" is for Mike Burke - he publishes a weekly Technical Report analysis for the US stock market. It's posted at Safe Haven, and if you read it you can also see his info on how to sign up to receive it weekly by email. Not really the only thing I'd use but a good adjunct to weekly preparation.

"B" is also for the Bradley siderograph which produces turn dates. But I'll put it at the bottom as "Z" for Manfred Zimmel who produces a forecast chart (warning, the highs/lows aren't absolute - only consider the strong dates as turns; I've even seen them result in a continuation twist rather than pure turn). Under Zimmel below, you'll also find Manfred's explanation of the Bradley siderograph.

"C" - hey, a three-fer! Tony Caldaro, ChartsEdge, and Jim Curry. We'll take 'em one at a time. Tony Caldaro is the greatest Elliott Wave analyst of our time, in my humble opinion. He's reinvented it and calls it Objective Elliott Wave (certainly distinguishes his detailed work totally from that discredited permabear Robert Prechter of Elliott Wave International). We're honored to feature Tony's updates here on a regular basis. Currently he's depicting the stock market at a serious juncture, which you can read about and see in his update posted here yesterday.

ChartsEdge by Mike Korell produces keen cycles forecasts for different time frames,. Mike developed unique ways to systemetize the forecasts via a neural network incorporating cycles of varying lengths. He also (for subscribers) incorporates pattern recognition and physics (geomagnetics) for daily and weekly charts that work uncannily well. We're pleased to feature his week-ahead cycle-based forecasts each weekend (and I like to use his daily subscriber charts for intraday trading).

Jim Curry does methodical cycles work. Sometimes he shares a free article that we post. Hey, his February 2011 article was a tour de force with chart projections that are still working! (though his subscriber updates will have been targeting the choppy action since summer). The chart at the top of this article is just one of many you'll want to see in "Stock Cycles Looking for a Peak!" posted 2/22/11 at http://cyclewave.homestead.com/stockcycles.html.

"D" is for DecisionPoint by Carl Swenlin. A solid set of chart work that readers may want to look at from time to time.

"D" is also for Tom DeMark; and interestingly you can often get DeMark signals info for US and other stock markets, even other tradable assets, from Kevin Depew via his Twitter @kevindepew and sometimes that and/or other insights from Joshua Demasi tweeting @joshuademasi.

"D" can also be for Daneric's Elliott Waves at http://danericselliottwaves.blogspot.com/. It's his hobby, so not as complete and rigorous as Tony Caldaro of course. But if you enjoy seeing what it's like to work through Elliott Wave analysis and probabilities, you may enjoy looking at it from time to time. Daneric is talking about a bearish wave 2 up scenario, so that implies a substantial stock market drop looming just ahead! Still, I've gotta say we do turn to Tony Caldaro for Elliott Wave projections, addressed below.

"E" is for the Economic Confidence Modeled pioneered by the iconoclastic Martin Armstrong. It's been awhile since we dug up his updates, but now he's out (literally) and about, and prolific. I have the general understanding that June 2011 bottomed Martin Armstrong's 8.6-year business cycle. That doesn't mean the cycle has to make a higher high, even though the early stage of any cycle is bullish. Note that the next low in that cycle will be in early autumn 2019 (interestingly, some project gold to be bullish, with weak stock markets, into 2020). If you want to study Martin Armstrong's work, including his current and new reports, go to Writings | Armstrong Economics at http://armstrongeconomics.com/martin_armstrong_writings/. Some you may find rather interesting are:

Gold and Reversals, 12/27/11, at http://armstrongeconomics.files.wordpress.com/2011/12/armstrongeconomics-answering-questions-gold-reversals-122711.pdf.
Martin Armstrong's December 27, 2011 report at http://armstrongeconomics.files.wordpress.com/2011/12/armstrongeconomics-financial-border-controls-122711.pdf.
Armstrong's interesting discussion and forecasting levels regarding the demands and prospects for gold, the US dollar, and US bonds in these turbulent times - why they're going up (and what'll make the dollar and bonds go down): http://armstrongeconomics.files.wordpress.com/2011/10/armstrongeconomics-30-yr-rates-record-lows-100711.pdf.
Also his 11/4/11 "Financial Armagedon" report with discussion of debt, currencies, and gold as a hedge and investment including a detailed analysis of gold forecasts for the coming months and years: http://armstrongeconomics.files.wordpress.com/2011/11/armstrongeconomics-financial-armagedon-110411.pdf.

"K" is for Samuel Kress, though it could almost be for Kondratiev, because Kress analyzes long-wave cycles (such as 60 and 120 years). His updates are sometimes summarized by Clif Droke in articles at Safe Haven. Clif has stated that the 6-year cycle peaked around October 2011, and suggests that the stock market may not make a new high before the long-wave cycles bottom in the years directly ahead.

"M" is for the incomparable Raymond Merriman whose public weekly previews we're delighted to feature. If you don't already have his Forecast 2012 book, go to MMACycles.com and get it now. There's a wealth of great forecasting for the stock markets, US bonds, currencies, precious metals, crude oil, and grains, plus other bonus features like forecasts for the US presidential elections, the US and the world socionomically for the years ahead, the Federal Reserve, and annual horoscope forecasts for individuals under the various astrological signs. Fascinating stuff.

"M" is also for McClellan - we greatly appreciate using the Oscillator and Summation Index invented by McClellan ... Did you know they have a website? Maybe I won't agree with them 100% but they're doing a lot of great work. Check out their latest "Copper Weakness Is a Warning Sign - Free Weekly Technical Analysis Chart - McClellan Financial" sounding, a warning based on weakness in "Dr. Copper" at http://www.mcoscillator.com/learning_center/weekly_chart/copper_weakness_is_a_warning_sign/. But copper isn't gold - see their post earlier this year, One to Three Years Left For Gold's Run - Free Weekly Technical Analysis Chart - McClellan Financial, at http://www.mcoscillator.com/learning_center/weekly_chart/one_to_three_years_left_for_golds_run/.

Another to consider is Marty Chenard who has a website service and occasionally posts at SafeHaven. His work is good but he isn't very open in public about forecasts for the future.

"M" is definitely also for Mr. Top Step, veteran traders of the ES_F (S&P futures), bonds and more, and if you're seriously trading you'll want to follow those tweets @mrtopstep.

"N" is for the Najarian brothers, Jon and Pete (yes, same as on CNBC's Fast Money, and along with Rick Santelli (also a veteran featured on CNBC many mornings), in the movie Floored). Again, if you're seriously trading, you'll want to keep in touch with their optionMONSTER, and tweets via @optionMONSTER and especially @optionMONSTERfd.

"O" is for the Outlook, that is, the Monday Morning Outlook posted (and can be received by emails) by the excellent Todd Salamone and of course Bernie Schaeffer and increasingly Rocky White at Schaeffer's Investment Research. Todd Salamone helps keep and eye on the technical and sentiment backdrop each weekend, mainly for the US stock markets.

"P" could be for Phil Davis who has his Phil's Stock World website with subscriber services, and occasionally posts at SeekingAlpha. His work is very good, but he focuses almost entirely on heavy-duty options trading, and isn't very open in public about forecasts for the future other than for the immediate future.

"P" will also be for Prieur de Plessis whose "Investment Postcards" updates often contain good alerts and interviews. Such as the next one, below:

"R" goes to the venerable Richard Russell. You'll want to know this: “Upside gold crescendo lies ahead,” says Richard Russell « posted at Prieur de Plessis' Investment Postcards from Cape Town, December 31 at http://www.investmentpostcards.com/2011/12/31/upside-gold-crescendo-lies-ahead-says-richard-russell/. Russell also issued a bearish alert on the stock market recently, indicating he doesn't expect it to make new highs.

"R" can also be for Alex Roslin who creates trading signals for 8 markets (SPX, Nikkei, gold, oil, natural gas and more), at his http://www.cotstimer.blogspot.com, using the weekly Commitments of Traders reports. He's improved his analysis and signals during the four years he's been posting and you'll want to keep an eye on his signals.

"S" we'll assign to Sentimentrader - they produce a neat gauge each day ( which Andre Gratian includes often in his reports). They also have other free and paid services, including a blog and a Twitter (I do follow them on Twitter).

"T" has to go to Terry Laundry with his trademarked "T Theory™" (incorporating breadth/strength analysis) as well as incorporating some cycles has definite opinions regarding the path of the stock market, gold, and US Treasury bonds. Yes, he's talking about a projected low date in January, and has thoughts about price and time both then and as 2012 will progress. Terry also has projections for stocks and gold (and probably bonds) that go out for years ahead. You can hear Terry's free T Theory weekend updates at http://www.ttheory.com/observations.php, which also has a link to his free public charts at Stockcharts.com.

"V" is definitely for VIX and More, analysis by Bill Luby on the volatility index. You can follow his VIX signals and informative discussions at http://vixandmore.blogspot.com, and via Twitter too. Anything you want to know about how the VIX works, "and More", you can learn there.

"Z" is for Manfred Zimmel with his work on the Bradley siderograph, at Zimmel's Amanita Market Forecasting site. Here's a quote of his Bradley chart discussion at http://www.amanita.at/FAQ/FragenzumBradley-Siderograph/Bradley-Siderograph/

The Bradley [astrology-based] siderograph was developed in the 1940'ies by Donald Bradleyto forecast the stock markets (link book). Bradley assigned numerical values to certain planetary constellations for every day, and the sum is the siderograph. It was originally intended to predict the stock markets. The noted technical analyst William Eng singled out the Bradley model as the only 'excellent' Timing Indicator in his book, "Technical Analysis of Stocks, Options, and Futures" (source: Astrikos).

It is crucial to understand what the siderograph is about since many traders (and even financial astrologers) misunderstand it. Over the decades it has been observed that the siderograph can NOT (!!!) reliably predict the direction but only turning points in the financial markets (stocks, bonds, commodities) within a time window of +/- 4 calendar days (in some cases up to +/- 1 week with the exception of Amanita pivots (+/- 1-2 days). Inversions (i.e. a high instead of a low and vice versa) are quite common.

In 2011 the Bradley siderograph could not beat random probabilities by much, when taking all turning points into considerations. Only the major turning points (bold & large in the chart) continue to be valuable timingtools *today*.

2011

2012

This is the Bradley standard model (original formula according to Donald Bradley) from December 2011 through January 2013:

In 2012 there are 4 major turning points:

• March 3, 2012
• June 12, 2012
• July 28, 2012
• December 22, 2012

Strictly speaking the siderograph dates are potential turning dates, bifurcation points in the language of chaos theory. In addition to the standard model there are 3 other models in the premium area, which may be quite different. All Bradley analyses in the free area since 2007 can be found here.

Raw data for your own research

Premium subscribers of Amanita Market Forecasting get the data of the four Bradley models for the period 1990-2020 as a .txt file (click here to subscribe). Another possibility: you calculate the data yourself with the aid of a financial astrology software ('Financial astrology is the use of astrology to analze and forecast the financial markets. Here financial astrology is understood primarily as an empirical-statistical discipline. The probably first financial astrologer in history was Thales of Miletus who is viewed as the father of science and philosophy (together with Aristotle). With the aid of astrology Thales foresaw an excellent olive harvest, so he hired all olive presses that he lent out with a huge profit, which made him a rich man.') - please go to the software-page. I mainly use the Market Trader von Alphee Lavoie, which is too expensive for the average hobby researcher though.

Enjoy the forecasts and educational analysis offered by the above array of great folks - it's enough to last you through 2012 in more ways than one! There certainly are others who do great work, I'm not intending to diss anyone by exclusion. I'm just including those that either we consistently refer to (readers will recognize as such here over time), or that I know my readers will find interesting for their views and/or analysis. I may augment this later this weekend and as the year progresses. Happy New Year all!

Stock market cycles looking for a peak! Jim Curry's Year 2011 cycles analysis

The stock market moves in cycles that push it to highs (sometimes higher highs, sometimes lower highs) called crests; and lows called troughs (higher lows in uptrends, and lower lows in downtrends). Jim Curry analyzes the market cycles and published a new report for the year 2011 (and beyond) outlook on February 22. He gave us permission to reprint it here. I'm sorry I wasn't technically able to post it sooner but the most important message may be what to look for this summer. So here's his report, as originally published at his website at http://cyclewave.homestead.com/stockcycles.html:

Stock Market Cycles Looking for a Peak!

By Jim Curry

February 22, 2011

Since the Summer of 2010, the various U.S. stock indices have garnered an impressive run, pushing up some 32% from our last major bottom with the 9 and 18-month cycles.

The current upward move was anticipated, with the 180-day (i.e., 9-month) cycle confirming various upside targets along the way. In terms of cyclic price projections, back in September this 180-day cycle had confirmed an initial upside target to the 1187.09 - 1226.23 region for the SPX, which was satisfied on 10/21/10. Shortly afterwards, this cycle confirmed an additional upside projection to the 1243.16 - 1286.36 level, which was met on 12/13/10. Before this target was even satisfied, the cycle then confirmed yet another upside target to the 1259.47 - 1314.71 region - hit on 12/28/10. A final upside target with this wave was confirmed to the 1302.16 - 1314.71, met back on 1/28/10. You can see each of these targets, along with the current position of this 180-day cycle, on the chart below:

(Click on any chart to view it as a larger image)

The 180-Day (9-month) Cycle
At the present time, the 180-day wave is around 161 trading days along from its last bottom, which was the July, 2010 low of 1010.91 on the SPX. This positioning implies two things: (1) the cycle is bullishly right-translated, still making higher highs well past the halfway point, and (2) it is well into its range for a peak. The next bottom for this wave is scheduled to materialize in the month of March, though there is an alternate to this which could push it further out into the April - June timeframe.

At what price level this 180-day component will top is a good degree of speculation; there was resistance at or near the 1300-1314 range - which has been exceeded, and thus is now new support to any move lower. The next area of real resistance won't come in until the 1365 area (plus or minus 10 points), and will be key to watch in the coming days, should it be tested.

In terms of time, approximately 85% of the upward phases of this 180-day wave have seen their peaks made on or before the 173 trading day mark, suggesting that its current upward phase may have its peak set in place by the early-March timeframe. Until a higher level is seen, the current downside 'reversal point' for this 180-day cycle is any intraday push back below the 1271 figure; in other words, below 1271 SPX CASH will favor this wave to have topped - while remaining above the same will allow for the cycle to remain in its current bullish configuration with price. Near-term support for the SPX is currently at the 1317-1334 range, key to note as we head into the new week.

Once the next top is in place with this 180-day cycle, then the same should give way to a 2-6 week correction phase. That correction is likely to be in the range of 7% or-better off the top, and ideally will see some attempt at the 200-day moving average - wherever it is at the time. That same 200-day moving average should also provide important mid-term support for the SPX, and would ideally hold off any decline phase with this wave going forward.

Stepping back, the downward phase of this 180-day cycle is favored to register the pattern of a 'higher-low' - meaning that it should hold at or well above it's prior bottom of 1010.91 SPX CASH. If this pattern of does play out as expected, then the index has approximately 80%-85% odds of making new highs again on the next 180-day/cycle upward phase that follows. That would then set up a peak with the larger 360-day component, which is currently looking to peak at some point around the Summer of 2011. The chart below shows a 'stepped back' view of both the 180 and 360-day waves:

The 360-day (18-month) Cycle
Like the smaller 180-day component, the 360-day cycle also bottomed at the July, 2010 low of 1010.91 on the SPX - and thus is currently seen as 161 days along. However, unlike the smaller 180-day wave, this component is currently seen as being in a bullish configuration.The upward phase of this 360-day wave is favored to last into the July - September timeframe of this year, then to set up what could be a much more important top with the larger four-year cycle.

The current upward phase of this 360-day cycle has registered the pattern of a 'higher-low'/'higher-high', in that it held above its prior bottom of 666.79 (from 03/06/09) - and took out its prior peak of 1219.80, seen on 4/26/10. When this particular pattern has been seen in the past, then the following 360-day/cycle rally phase averaged around 270 trading days before retopping. If something similar is seen here, then the inference is that this 360-day component will hold up into July, 2011 before topping (plus or minus).

In terms of patterns, the larger four year cycle (more on this one in a bit!) will usually take the shape of a 'three phase' affair, normally consisting of three rotations of this 360-day cycle. The greater-majority (85%) of these have seen the four-year cycle top in either its second or third upward phase, which we are set to do here (we are in the second 360-day upward phase right now). In terms of time, approximately 80% of these 'second' phase rallies with the 360-day cycle have topped out on or before 14 months from their bottom. Thus, taking the July, 2010 bottom and adding 14 months gets us September, 2011 as an approximate late-end expectation of when this (360-day) component should peak.

In terms of price, the average 360-day rally - when registering the above-noted pattern of a 'higher-low/'higher-high' - has been in the range of about 40% (or better) off the bottom. As noted many times (in my subscriber-based weekly outlook), if something similar is seen on this cycle's current upward phase, this could put the SPX up into the low-1400's before the next 360-day peak attempts to form.

In terms of actual cyclic projections from this 360-day wave (chart, above), there was an initial upside target (given back in October, 2010, also posted in a prior article) to the 1257.67 - 1312.51 range on the SPX CASH, which was met on 12/22/10. On or not much afterwards, there was a secondary upside target for this cycle to the 1300.87 - 1365.31 range - which was hit on 1/27/11. There was then a third upside target to the 1348.24 - 1404.35 region - which was nearly hit last week. This component has recently confirmed an even higher upside target to the 1408.06 - 1479.23 range, which is now right in line with the normal statistical upward phases with this wave.

As noted above, this 360-day cycle will ideally see it's peak sometime made between July and September of this year. Following whatever peak that ends up being registered with the same, the following 360-day/cycle downward phase should take the SPX sharply lower into the Autumn months - with the average decline (when coming off a 'higher-high') normally in the range of about 15-20% off the top.

Following whatever low that is registered with the 360-day cycle into the Autumn of 2011, the next upward phase of this component should take the SPX higher into the Spring of 2012, there setting up another top. Statistically, that rally should be in the range of 20% (or better) off the bottom - but could be as high as 30-40% - depending on how the action plays out into the Autumn of this year.

The 4 Year Cycle

The 4-year cycle (chart, above) is currently seen as 494 days along from the 03/06/09 low of 666.79 and has been regarded as bullish into at least February of 2011 (which has obviously been satisfied) - but, more ideally, will hold up into the Summer of 2011 or later. The next low for this component is due in the Autumn of 2012 or the Spring of 2013. However, this cycle could potentially stretch out its next bottom into the year 2014 - which is where the 'presidential cycle' low is due.

In terms of price, the average price rally with this four-year wave in the past - when coming off the pattern of a 'lower-low' - had been over 100% from trough-to-peak. With that, the indications were that the SPX would see an push up to the 1330's or higher before this cycle topped; this statistical assumption was noted in some prior articles - and has now been met with the recent action.

In terms of actual cyclic price targets, back in early-November of last year this cycle ended up confirming an upside target to the 1423.17 - 1591.25 SPX CASH range , which is still open at the present time.

For the long-term picture, the upper end of the four-year cycle target range (i.e., mid-to-high 1500's) should also act as major resistance to its current upward phase, with trading band resistance at or near the same vicinity (upper red channels, chart below). Once this cycle does peak, then the average decline on the following downward phase of the same has statistically been in the range of 35-40% off the top, while the normal minimum declines have usually been in the range of 20%-or-greater before bottoming.

For the long-term picture, the upper end of the four-year cycle target range (i.e., mid-to-high 1500's) should also act as major resistance to its current upward phase, with trading band resistance at or near the same vicinity (upper red channels, chart above). Once this cycle does peak, then the average decline on the following downward phase of the same has statistically been in the range of 35-40% off the top, while the normal minimum declines have usually been in the range of 20%-or-greater before bottoming.

The Medium-Term Cycles (45 and 90-day Waves)

Stepping in a bit closer, the smaller 45 and 90-day waves are also in topping range, with the smaller 45-day wave now at 21 days along and the larger 90-day cycle currently at 65 days along. The last low for the 45-day wave was the 1/20/11 bottom of 1271.26, with recent rotations averaging around 36-38 days from trough-to-trough. That projects it's next bottom for around mid-March of this year, plus or minus a week in either direction.

The last bottom for the 90-day wave was the 11/16/10 low of 1173.00 on the SPX. The most recent rotations of this cycle have been averaging around 78-83 trading days from trough-to-trough; that projects the next low for this component for around mid-March of 2011 (plus or minus), which is approximately where the smaller 45-day wave is projected to bottom.

For the smaller 45 and 90-day waves, it would only take a daily close below the 1308 figure to confirm their peaks in place. Should that develop, then we would have to look for additional correction into around mid-March (plus or minus). Otherwise, remaining above 1308 on a close will keep the shorter-term 45 and 90-day cycles in their current bullish configuration.

With the above said and noted, there are two ways that the action could play out in the weeks/months ahead. The first scenario is simply for the current 90-day upward phase to peak the larger 180-day component. If that is going to be true here, then a daily close below the 1308 figure on the SPX could not only indicate a 90-day peak in place - but also a top with this larger 180-day wave. That would then give way to a correction of 7% or better off the top, one that would last 2-4 weeks, and would then give way to higher highs on the next upward phase to follow.

The second (and alternate) scenario that could play out would look something like this: the SPX confirms a reversal to the downside with the 45/90-day waves in the next week or three (possibly off the 1360-1375 SPX CASH range), but then holds above the 1271 level on that correction. That would allow for a push to new highs again on the next upward phase, which would only then peak the larger, (and extended) 180-day cycle. From that high we would then see the normal 7-10% correction with this component, likely coming in the form of a late bottom for the same in the April/May timeframe (plus or minus).

Regardless of the above, the 200-day moving average should provide important near-term support to the next 180-day down phase. And, provided the same holds any correction with this component (plus or minus), then the expectation would be for higher highs to continue to materialize into the Summer of 2011 (i.e., July - September), then to set up a more important peak with the larger 360-day component at or into the low-to-mid 1400's on the SPX.

Jim Curry - Market Turns

website: http://cyclewave.homestead.com/

90-Day Cycle Complete - Technical Warning Signs Brewing! Jim Curry's update

Folks, it's been a while since we've been able to share one of Jim Curry's cycles updates of the stock market, based on the S&P 500 index ($SPX). Cycles are about projecting highs and lows based on time periods; and some cycles analysts also incorporate price projections. Jim's website Market Turns is always in the sites list at the right side of the page here, and we're delighted to share his new update which also contains some warnings about the strength of the stock market. This update will be of great interest to traders and investors who study cycles in the markets. We'll also be interested to see whether it correlates to some of the other signs we've been seeing based on other methods. So, here's a look at Jim Curry's current cycles views:
=============

90-Day Cycle Complete - Technical Warning Signs Brewing!
By Jim Curry - Market Turns
December 7, 2010

In a prior article from back in November, I pointed out that the technical indications favored that the 90-day time cycle was in topping range - and was thus due for a short-term peak in the markets. However, that top was not to be made prior to the April high of 1219.80 SPX CASH being taken out to the upside. Below is the chart from that article:

Back in November I noted that this 90-day cycle was likely to give way to the largest-percentage correction seen since coming off the late-August bottom. That is, most of the prior corrections had been in the range of about 2.3% off the top, and with that the coming decline with the 90-day cycle was expected to be greater than this amount.

More specifically, the statistical analysis of the 90-day downward phases in the past had suggested that this correction should be at least 7 trading days off the top - and would ideally decline 4.4% or better before bottoming out. The actual decline with this component ended up lasting exactly 7 days and 4.4% - a direct hit in terms of minimum statistical expectations.

At the time I pointed out that the correction with the 90-day cycle was only to be short-term in nature, as indicators such as the advance/decline line had confirmed the action - and thus were suggesting that any short-term decline would end up being followed by a push to higher highs on the following swing up. Here is how this 90-day cycle chart looks at the present time:

Also noted was a still-outstanding upside target from the 180-day cycle to the 1243.16 - 1286.36 region on the SPX. In other words, following a correction with the 90-day wave (i.e., 4.4% off the top or better), the following upward phase of this cycle was favored to give way to new highs for the larger swing - and, ideally, a move into this 180-day target zone.

What To Expect Now

Right now, the 90-day cycle is deemed to have bottomed at the 1173 level - and thus is pointing higher off the same. Ideally, this means that we are in the upward phase that will top the larger 180-day component, which is now approximately 110 trading days along from its last bottom - which is the July, 2010 low of 1010.91 SPX CASH.

With the above said and noted, the primary focus for mid-term players should be on the 180-day wave, which, as noted above, has a current upside target to 1243.16 - 1286.36 SPX CASH - a target that was originally triggered back in October. This range is not only the upside target for this wave - but is also the favored range to complete the current upward phase of this same cycle. Here is what this 180-day component looks like right now:


In terms of time, the larger 180-day wave is favored to top between now and January of 2011. Traders should bear in mind that this is a large cycle - and thus has a wide average variance of when it could actually form its peak. Even said, the 1243.16 - 1286.36 range is the favored zone for it to top out, and, if the SPX does move into this area in the days/weeks ahead, traders should be looking at technical indications to either exit (and/or scale-out of) mid-term longs. Alternately, the short side could be attempted - though you should also keep in mind that the larger trend (i.e., with the four-year cycle) is still deemed to be pointing upward for what could be many more months before it peaks!

Technical action

As noted several times in prior articles that I have written, the advance/decline line (chart, below) had yet to register a major divergence between itself and price action - something that we would expect to see on or well before the four-year time cycle actually tops; this has been true about 85% of the time in the past history of this larger cyclic component:


With that, the suggestion from the advance/decline line had been that higher highs for the larger swing would continue to materialize after shorter-term correction phases. That is, traders who are attempting to call a four-year cycle top before the advance/decline line actually diverges are attempting to do something that occurs less than 15% of the time.

Having said and noted the above, there are definite technical warning signs that are currently brewing - at least in regards to the near-term action.

That is, of particular note on the chart above is the action of the McClellan Summation index, which is shown in green. You can see that this particular indicator is going to be hard-pressed to make new highs for the larger swing - even though price is currently within earshot of doing the same.

This is important, as a divergence in the Summation index is normally seen at or near cyclic peaks - with many occurring at larger degree tops, such as with the 180-day cycle. In other words, the market is starting to skate on 'thin ice', at least as far as technicals are concerned. Having said that, it is always possible that normal bullish seasonality could override what the technicals are suggesting.

My basic rule of thumb is that the bigger the divergence in the McClellan Summation index (and/or, the longer that it is present), the larger the following correction will be. Rewind to the July bottom, which saw a good divergence between the Summation index and price at the time; the following rally was 120 points off that bottom into the August high. There was also a divergence at the April top, one that was not as pronounced in the indicator - though it did last a long period of time. It eventually gave way to the correction into the July 1, 2010 bottom.

For the bigger picture then, we have the advance/decline line still in OK shape, though the McClellan Summation index is looking like it is going to show a good divergence from price - a technical negative, if seen as the 180-day target is traded into.

The bottom line with all of the above is this: the SPX should make a move into the 180-day target in the days/weeks ahead. However, the technical indications are starting to suggest internal weakness - which is consistent with what we should expect to see as this larger cycle starts to roll over, ideally occurring some point between now and early-January, 2011. Once this cycle does turn down, then once again we will be set up for the largest percentage correction seen since coming off the late-August low, a correction that is likely to be in the range of 7-10% off the top before bottoming out. More on all of the above as we continue to move forward in the cyclic configuration.

Jim Curry - Market Turns

website: http://cyclewave.homestead.com/

S&P 500 technical analysis: What the Stock Market Cycles are Saying Now!! by Jim Curry

Cycles are a fascinating way of understanding the market's ups and downs. Jim Curry of CycleWave, http://cyclewave.homestead.com, has created and is sharing with us another swing view analysis of the S&P 500 index. It acknowledges the depth of the February low compared to the strength seen since, and even includes a remarkable view and projection over the coming months. Here we go (thanks Jim!):
=============

http://cyclewave.homestead.com/031810-2.html

What the Stock Market Cycles are Saying Now!!

By Jim Curry - March 18, 2010

Since my last article back in February, I have received a number of emails asking me for an update on the current cyclic position of the markets. While I have to reserve the most up-to-date analysis for our subscribers, in this article I am pleased to offer up my detailed comments on the current U.S. stocks indexes, and also on their relationship with the various cycles that I track.

With that said and noted, let’s get right into the nitty-gritty…

In my article/post from back in mid-January, I noted that several of the key mid-term cycles that I tracked were due to roll over to the downside. Those cycles were the 45-day (nominal 10-week) and 90-day (18-20 week) waves. Back then, I noted that the prior 45-day cycle target to the 1148.16 - 1172.38 SPX CASH area would act as firm resistance to that upward phase; the market peaked right into this resistance zone (1150.45 SPX CASH, on 1/19/10), and then triggered a sharp decline into the month of February with the same. The correction into the larger 90-day bottom was expected to be, at minimum, 4-5% off the top - though the statistical average was noted as closer to 6.2%.

Also back in January, we took a look at technical action - as technical non-confirmations will usually accompany mid-term cyclic tops and bottoms. As noted back in January, the shorter-term McClellan Summation index was diverging from price action - which was indicative of a 45 and 90-day cycle top forming. However, the fact that the larger advance/decline was confirming the action suggested that higher highs were likely to follow that 45/90-day correction. I will address the current technical state of the market in the latter part of this article.

After the decline with the 45 and 90-day cycles was underway, both the Hurst channel analysis - as well as a statistical study on patterns - offered up some additional information on what we were to expect. Back in a second article from 1/26/10 I noted that taking the 1085 level out to the downside on the SPX would indicate that the 45-day cycle had seen the more bearish pattern of a ‘higher-high/lower-low’ - and that the average decline with the same was normally in the range of 8.5% off the top. This favored a move to the 1053 level or lower on this index. Below is the original forecast chart, vs. how it played out in real-time:

On Tuesday, 2/16/10, the SPX then confirmed a 45-day cycle bottom in place - and also confirmed an initial upside target with the same to the 1107.08 - 1118.74 range. Shortly thereafter, the index then indicated an additional upside target to the 1128.20 - 1146.80 range. The first of these targets was hit on 2/18/10, with the higher target satisfied on 3/5/10.

With the smaller 45-day cycle having registered the pattern of a ‘higher-high/lower-low’ - and then confirming a turn up with the same - there were very good-odds that the larger 90-day wave had also bottomed. This was based upon looking at past instances of this particular wave, which only occur, on average, about once per year. That is, going back over the last decade - and using the 200-day moving average (bull market) as a filter - approximately 80% of the time that the 45-day cycle had turned up from the pattern of a ‘higher-high/lower-low’, the same had signaled a mid-term bottom in place for the larger 90-day wave.

In addition to the above, the average rally with the 45-day cycle - within the above pattern - had been in the range of 9.3% or better off the bottom, which made the suggestion that the SPX would push as high as the 1143 figure or better before it topped. In terms of time, that average rally lasted 31 trading days before peaking - which suggested that this cycle would try and hold off it’s next top until on or after the third week of March (which we are now into).

With all the above then said and noted, let’s take a look at the current mid-term cyclic model, via the table below:

From the above table, you can see that the smallest wave - the 45-day component - is now 28 trading days along from it’s 2/5/10 bottom. Based upon the position of each of the larger waves, this 45-day cycle is expected to be very bullishly-translated to the right (which simply means a peak well past the midway point). In other words, the top for this component should still be out there somewhere, and may attempt to form sometime later this month. Here is a look at the updated Hurst cycle/channels, which encloses this 45-day wave:

You can see on the Hurst channels that the forecast is looking for a strongly right-translated rally with the 45-day wave - and then a short decline into very early April. The one thing to note is that the channel forecast itself is looking for a bottom on the earlier side than the nominal 45-day wave actually is; the nominal wave is shown in the lower pane in dashed lines. The channel forecast is looking for an earlier low - simply based upon the fact that recent rotations of this cycle have been averaging closer to 37-38 trading days. This is due to the larger bullish trend that we are currently in. You can see that the larger channel (the one that encloses the 90-day wave) is moving firmly to the upside at the present time - and will limit any near-term downside from the smaller 45-day component.

Once the 45-day cycle does top in the next week or two, then what we should see some retracement into the next bottom for the same. In terms of time, this decline will last something like 3-5 days off the top - and should make an attempt at the 18-day moving average or lower (wherever that moving average is at the time); that decline could move as low as the blue 45-day moving average. Having said that, the actual peak for this cycle could well come from higher numbers than already seen, such as the 1180’s on the SPX, which, by the way, is also the current upside target from the larger 90-day component (to 1182.36 - 1213.04 SPX CASH).

Stepping back just a bit, you can see that the larger 90-day component is projecting higher prices into late-April or into the month May. In terms of price, as noted above there is a current upside target to the 1182.36 - 1213.04 range for this cycle, though I would not be surprised to see this target range overshot. In terms of time, the average rally with this 90-day wave, when coming off the pattern of a ‘higher-low/higher-high’, has normally averaged around 51 trading days before the following peak for the cycle was set in place. With that, the inference from the statistical/pattern analysis is in agreement with the channel forecast, in that the probabilities are better-than-average for this wave continuing to post higher numbers into 4/20/10 or later. With this said and noted, any short-term decline phases, if and when seen, should be looked upon as buying opportunities - in the anticipation of a move into the above price and time range.


The Big Picture
For the bigger picture, not only are the 45 and 90-day waves heading higher at the present time, but the larger 180-day wave also confirmed the February bottom as it‘s last low. That means that this cycle had to have also registered the pattern of a ‘higher-low/higher-high’ at the 2/5/10 bottom. And, when seen in past history of this 180-day wave, the average rally that followed was in the neighborhood of 27% from trough to peak. If seen on the current rotation, this would indicate that the SPX could push up to as high as the 1326 level before any larger top is in place with this component.
In terms of time, when the above pattern has been seen in the past with the 180-day cycle, the normal minimum upward phase into the following 180-day top was in the range of 109 trading days before peaking - with the average rally actually being closer to 145 days. If the SPX were to see the minimum rally here, then it won’t top out prior to 7/7/10; if it sees it’s average rally of 145 days, then it’s peak could hold off until 8/30/10 or later. Based upon the position of the larger 360-day wave, my assumption is that it will probably peak somewhere closer to it’s low-end statistical expectation (i.e. a late-July peak).

Stepping back even further, the larger 360-day (18 month) cycle is in the process of going over a very large top at the present time. On the chart below, you can see the approximate location of each of the 180 and 360-day waves:

The 360-day cycle is now viewed as 260 days along - currently regarded as neutral to slightly bullish. Recent rotations of this wave have been averaging closer to 400 trading days. With that, it is next due to low-out around November of 2010 - which is also where the smaller 180-day wave is set to bottom.

Going back to May of 2009, this 360-day cycle had confirmed an initial upside target to the 965.93 - 1032.41 region; this projection was satisfied way back on 7/23/09. At the same that the first target was hit, the cycle then confirmed a secondary objective to the 1151.97 - 1263.45 range, which was finally met on 3/12/10 (last week). This cycle has now confirmed what should be a final upside target to the 1196.37 - 1314.05 level for the SPX. This same target ‘range’ also has the highest-odds of peaking this particular wave, key to note in the weeks and months ahead.

In taking a side look at some Elliott-Wave (which I like to do on longer-term timeframes), I currently see the move off the March, 2009 bottom as a very large ABC corrective rally, with wave ‘A’ of the move in progress - and with wave ‘B’ ending up as the next 180/360-day combination low, ideally made on or around November of this year (plus or minus). That decline should retrace 38-50% of the move from the 666.79 low to whatever high that ends up being seen on the current upward phase. Take a look at the following chart:

Once the 180/360-day cycles bottom out in the Autumn months, then a ‘B’ wave decline should give way to a final ‘C’ wave to the upside into the Spring of 2011. An added influence to the upward phases of these waves will be the ‘presidential cycle’ - which tends to low-out in the fourth quarter, before turning solidly higher into the following year (2011).

If all of the above does play out as noted for the bigger picture, a Spring, 20011 peak would top both the 360-day and 4-year cycles - and would then set the index up for a sharp five-wave decline into the 2012-2014 timeframe, where the combination of the larger 4 and 36 year cycles would then bottom-out. Although this is a high degree of speculation at the present time (I will have to make adjustments as we move forward), the above chart 'suggests' how the action could play out on a longer-term time scale in the next few years.

As far as technical action at the present time, both the advance/decline index and the McClellan Summation indexes have taken out their January peaks - which has confirmed the uptrend and also suggests higher price levels should continue to materialize in the weeks/months ahead. However, if we move into the Summer months and were to start seeing divergences in the same at that time, then we would have to be on the lookout for what could be a major top forming with the 180/360 day cycle components.

The technical state of the market is a good subject for a future article; stay tuned.


Jim Curry - Market Turns
website: http://cyclewave.homestead.com

S&P 500 Down-Cycle Phase In Firm Force: Jim Curry's cycles update

Cycles play an important role in financial markets, and some analysts spend enough time working with them to be able to share expert insight. Jim Curry is weighing in again with a new update of his cycles work on the S&P 500. Check out his charts and discussion below, in this update from his website at http://cyclewave.homestead.com/0208102.html - thanks Jim!

=============

S&P 500 Down-Cycle In Firm Force

By Jim Curry - February 8, 2010

The U.S. stock markets have taken a dive since mid-January, where the various indexes were each in the process of going over larger cyclical peaks. That topping action was then favored to give way to a sharp correction into the month of March - then to be on the lookout for technical signs of the next mid-term low.

From a prior article, it was pointed out that the most dominant cycle for indexes like the S&P 500 has been the 45-day component - which is the current expression of the nominal 10-week cycle. This particular cycle/wave is nothing new to the markets, and long-time students of cyclical analysis are well aware of it's presence throughout history. Back in the 1990's it was the larger 18-20-week cycle that held the more dominant position, and - even to this day - still holds a firm influence on market direction. Having said that, below is an updated chart of the smaller 45-day cycle:

My prior observations regarding this 45-day cycle had suggested that it would not attempt to bottom out prior to the first week or two of February, simply based upon a detailed statistical analysis of the patterns of this particular component. That is, with it's peak made on 01/19/10 - and it's subsequent breach of the 12/9/09 low (it's last bottom) - this 45-day cycle had to have formed a more bearish pattern - that of a 'higher-high into a lower-low'.

When the above pattern ('higher-high/lower-low') had occurred in the past, the average 45-day down cycle phase lasted an average of 24 trading days off the top, while approximately 85% of those saw their declines lasting at least 14 days or more before bottoming. Thus, this statistical inference favored that any shorter-term rallies that would play out in-between would ultimately fail - and would then be followed by lower lows with this cycle into the first week of February (or beyond).

In terms of time, Friday's break to new lows for the swing has basically satisfied the early-end time expectations for this 45-day component. However, should it's decline see something closer to the statistical average, then it's bottom could potentially push out into 2/22/09 or later. Though this would appear to have lower odds - by no means can it be ruled out - at least until something else were to confirm an earlier-than-expected turn with the same.

In terms of price, the average 45-day down phase within the pattern of a 'higher-high into a lower-low' had been in the range of 8.4%; this favored a move to the 1053 level or lower before the cycle would attempt to bottom. Thus, Friday's action on the S&P has also now satisfied the statistical expectations with price. Even said, that won't mean that the S&P can't continue to push down to even lower numbers, as we do have the 200-day moving average acting as an attractor to price; this key moving average is currently at the 1018 figure, and is rising at about a point per day.

Stepping back just slightly, the larger 90-day (18-20 week) cycle also went over it's top back in January; it is now 65 trading days along from it's last labeled bottom, which was the 11/02/09 low of 1029.38 SPX CASH. Though this rarely occurs with a high degree of precision, should this 90-day cycle bottom where it is currently projected, it will low-out sometime around mid-March of this year. However, I should also point out that this cycle does have a large plus or minus variance of what could be several weeks in either direction. Here is an up-to-date chart of this 90-day cycle:

In taking a look at the pattern analysis of this 90-day cycle, with it's January top it had to have registered the pattern of a 'higher-high'. When seen in the past, the average time decline with this component was in the range of 23 trading days off the top; if seen on the current rotation, the inference is that this 90-day wave won't attempt it's next bottom prior to 02/19/10. On the back-end, approximately 85% of these 90-day down phases have seen their bottoms made on or before the 38 day mark - which makes the suggestion that the low for this cycle could be made on or before 3/12/10. This is important, as the next low for this 90-day component should end up as the next mid-term bottom for the U.S. stock market.

The above-noted observations with the 90-day cycle should be kept in mind going forward, as, in the past, the average rallies off the bottom for this wave have averaged either 14% - or 22% - depending on what pattern ended up being registered at it's bottom. We will have a much better idea on this as we move forward.

Otherwise, for the very short-term cycles, heading into the new trading week the probabilities seem to favor a bounce into an early-week high, with resistance at or near the upper red 'Cycle Bands' (chart, above). These bands are currently at the 1092-1095 range on the S&P, but are dropping rapidly and will move to the 1080's (plus or minus) early this week. If tested, they could stall any bounce attempt, thus allowing for a continued push to lower lows (and an eventual test of the 200-day moving average) on the following swing down.

Jim Curry - Market Turns

website: http://cyclewave.homestead.com

How the 45-day stock market cycle is influencing the S&P 500 now: Jim Curry's Market Turns outlook

We often refer to market cycles for information on whether these cycles are providing upside or downside influence on the S&P 500 index (and at times, the cycles in other financial markets too like commodities and currencies). Jim Curry has issued another S&P 500 market cycles analysis, entitled "Tracking The 45-Day Cycle In Stocks", at his site at http://cyclewave.homestead.com/012610.html

We appreciate that he's providing it also to share for readers here. This gives further insight into how the cycles pressures are likely to influence price and time in the equities markets. Here's what Jim is showing:

=============

Tracking The 45-Day Cycle

By Jim Curry - January 26, 2010

Through my outlooks in recent years, I have often pointed out that the most dominant cycle in US stocks is the nominal 10-week component - which, at the present time, has a current 'expression' of 45 trading days from trough-to-trough.

Recently, this component has begun to contract even further, with the average now being closer to 38-40 trading days. That is not that telling, though I should point out that cycle lengths will tend to contract in more bullish trends - and expand in more bearish ones. Obviously, the contraction in this cycle is due somewhat as the result of the larger uptrend seen coming off the March, 2009 bottom.

While there are differing opinions as to whether a major top was made last week in the SPX, what I want to do here is to take a closer look inside this 45-day wave, to see what statistical inferences (if any) could be drawn; this may give us some idea of how the action could play out going forward. The chart below shows the approximate position of this 45-day cycle:

Going back to the second week of November, 2009, this 45-day component had turned to the upside, then confirming an original target to the 1130 - 1153 region on the SPX; this was finally met in December. However, as this target was being approached, the same cycle confirmed an additional upside projection to the 1148 - 1172 range; this was also regarded as firm resistance level for the index, and was favored to contain the upward phase of the same.

Last Wednesday's reversal back below the 1130.16 figure was the downside 'reversal point' point for this 45-day wave. In other words, taking it out was a better-than-average indication that it's downward phase was back in force, which takes us to where we are at the present time.

In taking a look at a statistical/pattern analysis of this cyclical component, it had to have registered the pattern of a 'higher-high' at the 1/19/10 peak of 1150.45 SPX CASH. And, when seen in the past, the average time decline was around 10 trading days from peak to trough; currently, we are only 4 days along from that high.

Going a bit further, the current 45-day downward phase looks like it is going to take out the 1085.89 figure on the SPX - which was the last confirmed bottom for the this component. In other words, if seen. then it would indicate that the pattern we are witnessing would be that that of a 'higher-high/lower-low'. And, when this particular pattern has occurred in the past, the action was more bearish - with the average time decline being in the range of 24 days off the highs - while about 85% of these had seen declines of 14 days or more before bottoming.

Taking the above information, we can infer that the probabilities tend to favor a longer-than-normal 45-day down phase - and more especially if the 1085 level is taken out on the SPX. In terms of time, a decline of 10 days off the top would favor the low for this cycle not to be made prior to 2/2/10. However, using the more bearish pattern/statistics, should the SPX take out the 1085 figure then a decline of 14 days would put the odds in favor of a low being held off until 2/8/09 or later. Lastly, should the average of 24 days be seen, then the next 45-day low could potentially stretch out until 2/22/09 or later, though this seems a less-plausible scenario here - but not one that can be ruled out.

In looking at a statistical analysis of price with this 45-day component, should the SPX see the pattern of a 'higher-high/lower-low' (by taking out the 1085 level), then the average decline phase in the past has been in the range of 8.4% off the peak. If seen on the current rotation, this would favor a move to the 1053 level or lower before the 45-day cycle attempts to bottom in the days/weeks ahead.

Lastly, in getting a quick view of the cycle channels we can gain additional information, along with some added visibility. On the chart above you can see that the (smaller) 45-day cycle channel meets with the larger wave (which is deemed to be pointing slightly higher at the present time) at or near the same 1050 level (+/-) for the SPX. The 45-day channel also offers a bit more input, in that the top of the same currently comes in at or near the 1120's on the SPX (+/-10 points) - and thus is now going to act as firm resistance to any short-term rally attempts.

I should be quick to add that the statistical assumptions won't always be met; nothing is ever 100%. However, we have found over the years that they do tend to play out a good-majority of the time, certainly better than random. Even said, there is always the potential that the cycle could confirm an earlier turn than is suggested - which is why it always pays to monitor the accompanying technical action. We'll reassess this again at some point in the near future - including taking a look at potential alternate scenarios for the larger channel pathway.

Jim Curry - Market Turns

website: http://cyclewave.homestead.com