Tuesday, December 23, 2008

Nearing A Sell Signal

The markets are barely hanging by a thread. The bullish potential wanes with each passing day. As best as I can tell, the markets are in wave b of D down. Wave b has a couple of wiggles to go and then markets should fall to the December lows, after which we should see a surprising rally that does not surpass the December highs in wave E up. This last rally will fool a lot of people. On the other hand, if it does break out above the December highs next week it would be bullish for early January.

I have been pouring over my cycles data and I believe now that I can say confidently that November 21 was the 10 month cycle low. (This was my originally calculated date, that I later modified to November 26 and December 6.) Based on this I am projecting the end of primary wave 1 to be near the end of January. It calculates out to February 5, but I suspect it may come a little early since this is a 5th wave. That would be the bottom of the 11 week cycle. The mid-point of the 11 week cycle falls on December 29, so we should be nearing the end of this sideways movement.

As far as 2009 is concerned, you can check out the DJIA Post-Election Year chart at www.seasonalcharts.com. It shows a bottom in February followed by a substantial rally, which is exactly what I expect to happen. It is also followed by a substantial decline, which may be understated.

The indexes are only 1 to 2 days away from a macd sell signal. I will discuss trading tactics once wave E is near completion.

I had a shock today when I opened my platform and saw the QID down 12%. My stop was hit of course, but I did not know what happened until I called my broker and found out that Proshares declared a dividend today unannounced. I knew that this was coming from prior years, but in the past it as only a point or two. I think proshares owes it to those who trade these products to announce a dividend date in advance with amount of the expected dividend like any other stock. That way people can be prepared. Fortunately, I haven't lost anything but a commission as I reentered the position with new targets and stops. I will receive the dividend on tuesday which will offset today's loss. I will be putting a note up on the wall in large font for next year so that I can be prepared ahead of time.

3 comments:

dave said...

Sequence ?

"Wave b has a couple of wiggles to go & then mkts should fall to the Dec lows, after which we should see a surprising rally that does NOT surpass the Dec highs in wave E up. This last rally will fool a lot of people. On the other hand, if it does break out above the Dec highs next week it would be bullish for early January."

THEN:
"The indexes are only 1 to 2 days away from a MACD sell signal."

Therefore: "...surprising rally ..." should not last very long timewise at all.

If so, this is also what i see on the hourly & weekly charts. Hourly is approaching oversold; but weekly are not quite ready to rollover yet.

When Dec/January bears do get it going, they must take out the 12/12 lows forcefully, or else they'll have to start running the other direction soon. LOL.

Regards,
dave

dave said...

last yr's Christmas rally & turn of the calendar for DJI

Fri 12/21 13450.65 +205.01 +1.55%
Mon 12/24 13549.34 +98.69 +0.73%

Weds 12/26 13551.69 +2.36 +0.02%
Thurs 12/27 13359.61 -192.08 -1.42%
Fri 12/28 13365.87 +6.26 +0.05%


Mon 12/31 13264.82 -101.05 -0.76%

Weds 1/2 13043.96 -220.86 -1.67%
Thurs 1/3 13056.48 +12.52 +0.10%
Fri 1/4 12800.83 -255.89 -1.96%

Mon 1/7 12827.49 +26.66
Tues 1/8 12596.55 -230.94 -1.80% “The S&P 500 has now fallen 5.3% so far this year, its
worst start to a year since 1930.”

Weds 1/9 12735.31 +146.24 +1.16%
Thurs 1/10 12853.10 +117.79 +0.92%
Fri 1/11 12606.38 -246.7 1 -1.92%

Regards,
dave

dave said...

Craig, do you know of any implications of down Novembers followed by down Decembers (as we were in 07 & presently are in 08) ?

Thanks & Merry Christmas,
dave