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7/3/08 - Equities, Probable low this week
Last week I suspected we should make new lows for the Cardinal Moon of Jul 2/3rd, and we made marginal new lows on Tuesday the 1st and Friday the 3rd. Many indicators are as oversold as they were at January and March lows, but many others are not and suggesting we have not seen the lows of 2008. The SPX has a pretty clear count and probably requires one more wave down to 1220-1250 Monday morning to finish Wave 5 of 5 from the May 19th high. The White Tick line is making higher lows with each decline on the 23rd, 27th and the 3rd, and even appears to be breaking out of its triangle. The StochRSI has also been high all week and shows a structure with two waves up and probably one more wave up into Tuesday the 8th. Watch these developments during the week at my Live Charts. Charts courtesy of StockCharts.com Dow showing divergences near 11,000
The StochRSI and PPO divergences on the Dow are even more marked as it approaches 11,000, and we could see the Dow turn around for a few days into Thursday the 10th. With short term cycles both on Tuesday the 8th and Thursday the 10th looking like highs, Wednesday the 9th could be a pullback low in between. Short term cycles are tricky since they invert readily, but the wave structure, price targets and other clues below make this forecast the most probable. Charts courtesy of StockCharts.com The Equity Put/Call ratio has July 7th as a low
The 40 trading day cycle is very apparent in the chart of the Equity Put/call ratio below, and since 90% of these cycles are at least short term lows, we should expect a low early this week. However this ratio is still quite high, and we are likely to see further declines later on. Charts courtesy of StockCharts.com The McClellan oscillator has July 11th as a high
A variation of the 40 TD cycle above is the 37 trading day cycle, which is very easy to see in the chart of the McClellan oscillator below. We can see quite regular high and lows and we should expect Friday July 11th to be at least a short term high. Charts courtesy of StockCharts.com The VIX has July 9th as a low
The 55 trading day cycle shows up quite well in the chart of the VIX below and suggests a pullback Wednesday the 9th from any rally that develops Monday or Tuesday. Charts courtesy of StockCharts.com The SPX to VIX ratio has the July 18th Full Moon as a low
The 60 trading day cycle visible in the SPX to VIX ratio chart below is suggesting the Full Moon of July 18th might be a low as well. If we rally into the Friday July 11th as suggested by the charts above, we may pullback or even make much lower lows by the Full Moon of July 18th, since it is also a Cardinal Moon capable of generating vicious sell-offs. Charts courtesy of StockCharts.com Currencies, US Dollar makes a short term low
It appears the US Dollar has found support near 72 from the parallel channel, despite the news of the ECB raising rates, suggesting it will continue higher into the projected July 21st cycle high. Charts courtesy of StockCharts.com Bonds, Still near both 50/200 day MA
Bonds continue to struggle near their 50 and 200 day moving averages, and might make a false break above resistance early this week if stocks drop and rally as suspected. Assuming Bonds pullback as expected, they will likely continue to do so until the next cycle of late July as suggested by the US Dollar above. Charts courtesy of StockCharts.com Commodities, Probable pullback from USD strength
Oil continues to set marginal records as it inches towards 150, but it is doing so on weaker momentum and I doubt it reaches 150, and may fall dramatically into the next July 22nd cycle date. Charts courtesy of StockCharts.com Gold grinds slowly higher
Gold rallied from major support near the 13 month PI cycle of June 18th, and may pullback into the next date of July 16th if we are to see the US Dollar rally into its own July 21st cycle high date. Charts courtesy of StockCharts.com Silver has July 15th as a low
The 11 month cycle shows up well in Silver, and the last two cycle lows of Sep 15,06 and Aug 15, 07 saw serious declines in Silver so beware of a possible buying opportunity in Silver near the Cardinal Full Moon of July 18th. Charts courtesy of StockCharts.com |
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