S&P 500 upcoming 20 week low


#1

Below is a weekly view of the S&P 500. Looks like a mid-January 20w low coming up with maybe some additional turbulence into late January or early February given the dominance of the 40w price wave.

Below is an old school Walter Bressert 10 wk EMA of a 10 wk RSI (Google it). Similar to a DPO (displaced price oscillator) but it calculates to the end of the price series. I occasionally use it to preprocess data, plus it helps my befuddled mind with phasing and cycle dominance when looking at weekly charts. Confirms the 40w nominal cycle is currently running things.


#2

Yes I agree and think it is best to buy low as you can


#4

Are you thinking about a high in May too or are you giving me grief for being Captain Obvious? Thinking it might be a lower high in May.


#5

That sounds awful, lower highs ruin everyone’s parade. The amount of trading Im doing right now is limited, Curt, but
i have been waiting for this cycle specifically on equities. Im nervous about it, considering all the 2017 trading in
Equities.

Where is the money going to come from to fuel this rally? Rorationary effects of the new year? Is there a way to predict this rotation in your view? Im not smart enough for this but Im beginning to believe that the money has to come from somewhere to fuel greater earnings growth. I want to own banks, payment processors, REITS

Im believing what Im reading that the SP500 and Dow react favorably to tax relief. Hence SP500.

In terms of trading, I meant to say that I am buying daily red candles. For sure.
Thank you and Have a good one
Derek


#6

Hi Derek,

Being nervous here is probably not a bad thing. I agree there is a lot of good news already priced in and sentiment and valuations are at extremely high levels.

We are quite late in all the longer economic and market cycles and the Fed is tightening. The 5 yr to 10 yr Treasury yield curve slope is only 19 bps, which confirms this late cycle environment. A yield curve inversion (shorter rates higher than longer rates) is like ringing a bell that the high is in and a slowdown is coming. In my view, all this implies disappointment rather than upside surprises for earnings growth and stock prices in 2018. January (and the first quarter) will probably set the tone for the entire year.

My next rotation will be out of stocks. In the last two bear markets (2000-2003 and 2007-2009), nothing was spared. However, these environments also create great opportunities for those who are prepared.

Don’t believe everything you read.

Good luck.

Curt


#7

personally, I believe this week or next we will top with the 18 months cycle( which is 15 months) and correction until may-june 2018 to reach the next 18 month trough target 2200 or 1900 for the DJIA


#8

Curt, hi! Great analysis. I also expect 20 week low to show up by end Jan - mid Feb. With such overbought technicals at the moment my expectation would be to see some lengthy choppy action that would narrow the weekly bollinger bands. Triangle would be the best fit here in my opinion. Here is my expectation for the rest of the year.


#9

Since my 20 week price wave averages approximately 16 weeks, it is rolling into a high. The next low is not due until March. I’m keeping my eye on those steep short term FLDs and VTLs to unload longs.


#10

Hi William, are you not bullish now?


#11

Hi Derek.

I try not to think in those terms. Historically all of the easy money on the long side is made on the first half of the 4 year price wave. We are now at or approaching the half way point, depending on one’s method of analysis. The overall trend is still up regardless of the method used. Until that shows signs of weakening, which at some point it will, I’ll continue to trade on the long side.

William


#12

I find this correlation rather peculiar?


#13

Exact same 14 TD dominant cycle but Bitcoin leads. It won’t last forever and I wouldn’t place a trade based on this relationship but it is still interesting. Market analogs work until they don’t.


#14

BTC has the same spectral signature as the S&P 500. There is some minor variation at the very short end. The phasing is different of course.