Dec 17, 2011

Weekly review / Седмичен преглед

Last week I was expecting more on the downside and support around 1220-1225... SP500 closed the week half a point bellow 1220. The problem I see - more weakness than expected(we saw a low ~1210) and it lasts longer than expected. The bigger picture has not changed a lot but all this means less time(see the last chart) and weaker move on the upside.The chart bellow is adjusted accordingly.

The move from the October low does not look complete... at all. Besides the sell off looks like a slow bleeding and is awful with a lot of overlapping or with other words correction. The white lines show the move till now and one more move is missing. The highest probability is the yellow line minor new high above 1292. Another option is triangle. I do not like it but it can not be excluded at the moment.
Current thoughts - bottom early next week and rally till the end of the year with a top between 1292-1305.
I have downgraded to low probability the oder option for a higher prices:)

A closer look at the hourly chart - the last moves on the upside look corrective (bear flag). There is no signs of a bottom forming at this moment, so probably another negative day or two. Target is the 1200 level which is 61,8% Fibo retracement and support level.
The unexpected - on the daily chart the last two candles were inverted hammer. If we see surprise on Monday gap higher and a strong day it will be a nice candlesticks formation for a bottom.

Next week the smallest cycle should hit a bottom (28 trading day Hurst nominal cycle, around 20 days for SP500).
The next bigger cycle should reach a top the last week of December.Target 1295-1305 all resistance levels converge in this area.
The important one, the 20 week nominal cycle - since March 2009 it lasts 15W-16W for the SP500 and the last 3-4 weeks are sharp corrections. So after a top I expect a sharp sell off into January with a bottom the last week of it.

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