More Signs For A Bottom

The CPCE (Equity Only Put/Call Ratio) is a very good tool for measuring sentiment and spotting tops and bottoms. One notable occurrence in the above chart of the CPCE is the breakouts in both the PPO of the CPCE and the CPCE itself, which are indications that a full scale intermediate term correction is now underway. We can see that the CPCE and its 10MA as well as the PPO have alot of room to reach the levels seen at prior intermediate and primary term lows. This means that at a minimum we should expect the current correction to last another 2 to 4 weeks if not longer. That doesn't mean that the correction must be down the entire time. It can make a low, retest the high and make another low, essentially moving sideways and achieve the criteria for an important low.

My cycle work has lately not been in alignment with the market action, but sometimes you just have to step back and see the bigger picture. I was looking for a 40 to 42 day low in January that turned out to be a high. I looked at the Qs again and noticed that from 3/9/09 to 7/8/09, low to low, was 84 trading days, and from 7/9/09 t0 11/2/09 was 82 trading days. Counting from 11/2/09, we have exactly 60 trading days. If we project a low at 82 to 84 trading days from 11/2/09, this leaves 22 to 24 trading days from yesterday, which is March 3 to March 5, 2010, almost exactly one year from the 2009 bear market low. Sometimes the annual cycle overpowers the 10 month cycle, and that may be the case this time around. In any case, I believe that we will see a low in this correction sometime in late February to early March. The coming low may be just part of an even larger correction, which remains to be seen. Nevertheless, traders should prepare for another month of bearish market action.