6/15/09 - AstroCycle Update

Executive Summary Weekly Update Last week I expected the SPX to pull back to 875 but we held the 925 level as I also suspected was possible and tried to rally to 970. We continue to exceed the 944 level raising the possibility of reaching the Fib extension near 970 this week and/or the 1007 level by the end of the quarter, but this 950 area was key in 1998 and 2002-2003 and the risk of a 50-75 point pull back from here is quite real and is my favored forecast. Plan B has the SPX holding the 1998 lows of 925 and rallying to the 970 area. Technical The Ticks and StochRSI turned bearish and are not that oversold but the price is trying to turn up for a New Moon high leaving a big divergence that should resolve in a 50 point pull back to the lower parallel channel near 900, like we saw at the end of previous 13 trading day rallies. However, as long as we hold above the 1998 lows near 925 this week, we can not rule out a Fib extension of this rally to the 970 level for a June 22nd New Moon high. Wave Count The March 6th low was most likely a Wave B low and we are now completing a Wave C rally that will finish Wave 4 up from the November 21st low. Wave A up from the November low went 203 points in 6 weeks, Wave B went down 277 pts and took 8 weeks, and Wave C has now gone 290 points in 14 weeks and is probably complete or will be done between 970 and 1007 by the end of quarter like the 16 week 9/11 rally that ended with the quarter. Daily Update Most indicators are turning bullish into the close but the Tick lines are still making lower highs much like on Friday and we may need one more drop on Tuesday morning before we can rebound to the 935 area into the close Tuesday as the cycles suggest. Both Tick lines reached oversold together near the cycle on Monday and we should rebound on Tuesday from the high white Trin line as well, but the Put/Call lines never went very high and the rebound will probably struggle when it gets close to geometric resistance near 935, and the cycles suggest further weakness into the Wednesday cycle.

Breadth Summation Indexes (BSI)

Next Day Forecasting Accuracy Forecasting the close can be difficult at times, and you can use my recent performance on the right as a guide to the accuracy of my current vote, but I may skip voting if too cautious and my vote for Tuesday is bullish but cautious

Firebird - Your Score: 66.7% [G100 Ranking] Last 22 sessions: corrects=8, incorrect=4, omissions over limit=0. Session Opinion S&P 500 Score 06-15-2009 bearish down 06-12-2009 bearish up 06-11-2009 omission 1/10 up - 06-10-2009 omission 2/10 down - 06-09-2009 omission 3/10 up - 06-08-2009 bearish down

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Short and Medium Term Market Breadth

The Ticks are bearish and headed for an oversold low this week

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The Put/Call lines are turning bullish but still near the middle line

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The Momentum indicators and the Nasdaq 100 turned bearish

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The Volatility is in a bullish trend but forming a possible double bottom The 5 day Trin or Arms index is turning bearish

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The New Highs and New Lows are bullish but turning

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The McClellans are turning bearish again from very overbought

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Stocks on a Point and Figure buy signal turned bullish again but are stalling

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Stocks above their 50/200 day MA are bullish but are turning in overbought

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Cycles and Wave Counting

Full Moon high and New moon low? The Full Moon of June 7th will probably be at least a short term high, which could also turn into a nasty decline towards the triple witching expiration week of June 19th, since the New Moon of June 22nd is near a Cardinal Date and can generate extreme volatility and even panic selling three days before the New Moon. This New Moon is highly charged being directly opposed to Pluto, and 120 degrees from Jupiter and Neptune retro, and 90 degrees from explosive Uranus. Since Venus and Mars are also together and 120 degrees from Saturn, all these market moving planets are likely to have quite an effect on an otherwise quiet market. Some of these Venus-Mars-Saturn angles have a history of dramatic moves with the May 8, 06 high, the Mar 9, 07 low, and the Nov 30, 08 high as examples.

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The 30 day cycle in the Dow suggests weakness into Triple Witching Expiration

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The Nasdaq 28 month cycle high suggest weakness in June/July May 2009 is a 28 month cycle high in the Nasdaq, and in the last 30 years only two out of six signals were early. The May 1983 cycle was one month and 10% early, and the January 1992 cycle was one month and 3% early. Since we have already exceeded the May 2009 high of 1774 in the Nasdaq by 6% we may be in one of those special extensions, but the odds remain 2 out of 3 that we close below Nasdaq 1774 in June, and even more likely in July.

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Equities

Outlook for Tuesday is bullish to mixed

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Most indicators are turning bullish into the close but the Tick lines are still making lower highs much like on Friday and we may need one more drop on Tuesday morning before we can rebound to the 935 area into the close Tuesday as the cycles suggest.
See the NDX 1 minute chart here and the Dow 1 minute chart here

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Cycle turns late Monday, mid day Wednesday and late Friday

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Both Tick lines reached oversold together near the cycle on Monday and we should rebound on Tuesday from the high white Trin line as well, but the Put/Call lines never went very high and the rebound will probably struggle when it gets close to geometric resistance near 935, and the cycles suggest further weakness into the Wednesday cycle.

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Outlook for week of June 19th is mixed to bearish with a big divergence

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The Ticks and StochRSI turned bearish and are not that oversold but the price is trying to turn up for a New Moon high leaving a big divergence that should resolve in a 50 point pull back to the lower parallel channel near 900, like we saw at the end of previous 13 trading day rallies. However, as long as we hold above the 1998 lows near 925 this week, we can not rule out a Fib extension of this rally to the 970 level for a June 22nd New Moon high.
See the NDX 10 minute chart here and the Dow 10 minute chart here

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Wave C of 4 may be over close to the 9/11 lows and January highs of 944

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The March 6th low was most likely a Wave B low and we are now completing a Wave C rally that will finish Wave 4 up from the November 21st low. Wave A up from the November low went 203 points in 6 weeks, Wave B went down 277 pts and took 8 weeks, and Wave C has now gone 290 points in 14 weeks and is probably complete or will be done between 970 and 1007 by the end of quarter like the 16 week 9/11 rally that ended with the quarter.

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Wave 5 should start in June or early July and take us to new lows in 2009 The start of each major wave down since the all time high of October 07 can be seen clearly in the high Tick lines on top and the low Put/Call lines just below, and is confirmed more loosely with the Trin line at the bottom. All indicators are overbought, especially for a bear market, and unless we are starting a new bull market, these readings should send us lower into June and probably to new lows by October.

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Sentiment for the SPX suggests new lows in 2009 The blue Call buying line is now making a double top near the highest level in years, and is considerably higher than it was the last time the SPX traded near 944 in January, leaving us more vulnerable to a deep decline now than back then. Despite the fact that we keep making deep new lows with each decline, the Call buying remains at higher levels of optimism than at the October 07 highs and will eventually require a significant decline in 2009 to take it back down to the levels seen in 2008. See the Nasdaq daily chart here and the Dow daily chart here

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The Shanghai should decline into September The Shanghai has moved up in a fairly clear 5 waves and is probably close to ending its 72% rally although it did not quite reach the 3000 or 38% retracement levels.

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Australian market should pull back into September The Australian market like most others broke above the resistance near the 4000 level and is possibly targeting the Obama election high near 4300 but it will need to hold the 4000 level on any pull back to make that possible before a much larger pull back to the 3250 area by September.

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Commodities

The DBC/CRB should pull back into early July

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The CRB/DBC is climbing with a divergence in June and the cycles suggest we will eventually decline to the 21 to 22 area by early July to resolve the condition.

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Commodities should rally into late July Commodities finally broke above the 20 year S/R level near 250 and will probably reach the 280 level by July.

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Oil/USO should pull back into early July

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Oil and the USO should pull back towards the 60 area by early July, but it is not diverging as much as the DBC/CRB and may take longer to break down although it makes up 60% of the CRB.

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Oil should pull back into November from the 5.5-11 month cycle Oil is going parabolic and reached a geometric convergence near the 5.5-11 month cycle and will probably start to pull back towards the 50's by November.

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Gold should pull back into early July

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Gold is breaking geometric support and the indicators are all turning bearish with the expected pull back from the cycles, but I doubt it breaks the 1980 highs near 850 in this pull back.

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Gold should pull back into December Gold should pull back and continue to consolidate near the 1980 highs into the 4.3 year cycle high of the USD near December before the breakout and a large Wave 3 up to the 2000 level and above starts in 2010.

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Silver should pull back from the 1993 highs near 16 into early July

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Silver should pull back into December Silver should pull back to the 12 area from the 1993 highs near 16 into the 4.3 year cycle high of the USD near December before a large Wave 3 up to the 1980 level of 40 and above starts in 2010.

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Gold Miners should decline in June

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Gold Stocks should pull back into December Gold stocks are pulling back from the 7 month cycle high and are likely to decline to the 100 area and even lower into the December 4.3 year cycle high in the USD.

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Currencies

The US Dollar should rebound to the 0.83 level in June

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The US Dollar should make the low of the year by late July The USD is already coming close to the 0.77 area targeted for a Wave B low for the 4 month cycle low in late July, which will probably be the low of the year before a Wave C rally back to the 0.90 to 0.92 area into December for the 4.3 year cycle high of early 2010.

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The Yen may break the 100 level briefly in June before rallying

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The Yen should rally into September The Yen reached the most likely target for this Wave 4 near the 100 level and will probably break that level briefly before it can start moving towards 115-120 by September.

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The Loonie is parabolic and should exhaust in early June

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The Canadian Dollar should pull back into September The CDN Dollar broke through the trend lines near 0.88 ahead of the late June cycle high and will probably exhaust soon near the heavily congested 0.94 area.

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Bonds and Rates

The 30 year Bond should rebound into July

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The 30 year Bond appears to have completed 5 waves from the April 1st high and should move up to the top parallel channel near 120 by July

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The 30 year Bond is probably making a low near 112 The 30 year Bond is rebounding from the 2008 support area near 112 and will probably start to move towards the 125 to 130 area by year end, but it may test the 112 area again in late July.

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High Grade Corporate Bonds should pull back into July

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High Grade Corporate Bonds should decline into year end High-Grade Corporates are priced for perfection, and that is definitely not the current environment or even the one going forward, and the next crisis which is likely to be the upcoming GM bankruptcy will probably bring a dose of reality and take us down into the 80's.

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