Wednesday, April 20, 2011

$SPX - 2007 Cycle Update

Well, here we are back trading in the 1330 range just as the 2007 top cycle suggested.  My timing model indicated a bottom on April 15th +/-.  The market bottomed in the early hours of April 18th.  April 18th was also the day that my VIX chart suggested for a peak in the VIX. 

I marked on the following charts with green arrows the equivalent spot where the market surged today.  Likely next we should see some whipsaws comparable to the Weekly chart as the topping process completes.  It would be unreasonable to expect an exact match in small scale movements and price levels.  I want to stress it is the bigger picture that is important.

The market is now acting in a way that is extreme, and this is unusual.  However, this is typical just prior to significant trend changes.  Be aware, the picture is severely bearish. 

15min Chart

The Weekly shows a picture of the drop that the cycle predicts next.  It is deceiving as the decline should be much steeper.  Freefall! 

Weekly Chart


  1. i know its hard to say, but do you have a timeline? June when POMO ends? or before that...

    keep it up!

  2. There are a few different methods that I use to calculate timing. I need to see more to have the data to make an accurate estimate. Probably May.

    The curve ball is that the mkt should rise sharply after POMO ends.

  3. Not quite sure I am reading you charts right. Where you have "we are here" are you saying a massive rally is about to hit before the plunge. Thanks in advance..

  4. No, no rally at all. We are on the edge of the cliff looking down...

  5. I thought so..but I just saw the we are here line..and wasn't sure I was reading it correctly. I enjoy your posts..good stuff. G-

  6. Thanks. Have a great weekend!

  7. "My timing model indicated a low on April 15th-it came on Apr18th" I'm very confused here.On March 30th you posted that the low"within a few points" would be 1200.68 on APRIl 15th. So how did that low you called for come on the 18th-it wasn't anywhere near there.

  8. I have independant methods to calculate price and calculate timing. Matching them both up is the ultimate challenge.

    My timing model indicated that we should have a low April 15 +/-. We did, but that was just the low during the topping process. It was still early for the larger decline that my cycle work and calculations indicated. That decline comes next.

    I recognized this (timing) early on, and that is why I said I was covering shorts, and expecting a sharp rally.

    My work with the cycles, and calculations shows a much larger decline looming following the topping process.

  9. hi SC- so you believe the top is in? or do you still think we move to 1352? Are you looking for the drop to 1206 now, and then still a move up to 1352? Thanks!

  10. The mkt should top right around this level. A few points higher might be possible, but practically no significant upside from here.

    The freefall is next, with the final push up to 1352 anticipated to follow.

    We also have the mechanism in place for a freefall. I've looked around and almost everyone is bullish now. There is a vacuum under this mkt with no support. The bulls will rush for the exit all at the same time.

  11. Hi SC. Like your blog. You tell it as you see it without the BS. You sure nailed your recent call for a move up. Very impressive.

    If I have this right you are now looking for a sharp move down in May to the 1200 level or so and then a final move up (after POMO ends???) to 1350 or so?


  12. Yes, that is the basic idea Luke. Thanks.

    I do try to be definitive, and as specific as the analysis warrants. Of course the mkt does not "like" to be fitted into a square box.

    I am constantly assessing progress of the plan. I know by being specific that the plan may not be perfect. Modifications are required sometimes.

    To me this is preferable to a "politically correct" approach. I could be right all the time by saying little. For example, a politician would say "the market appears overpriced and could come down, possibly but not necessarily soon".

  13. SC- so do you expect this "freefall" to unfold across just a few days, or a few weeks?

  14. We should see some weakness this week, but more sideways than anything into early May. The decline will likely start at a slower pace and then accelerate into the freefall.

    The steeper part of the decline may only be a few days but the whole process will take weeks.

  15. So if there is a "freefall" to happen in May will that get extended again when it doesn't happen. I have noticed you have been calling for a crash or freefall several times since the end of Novemeber of last year. Neither a crash or freefall has happened. 6 months calling a top and freefall isn't accurate. Interesting reads, but calling a top for over 6 months is a long time. It's just an observation of mine that's all.

  16. If looking to catch big moves then patience is required, and it is well worth the wait when you are correctly positioned.

    I find that typically things do take longer than first expected. Along the way there are large swings to trade (such as in March). I've been very bullish at times over the last few months as well, and have done well on bullish trades.