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Stampede of Short Chickens Has Bulls Sniffing Something

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We were expecting a short term cycle low by late in the week, at 4275 or so, and we got it.

Support bent. It stretched. It bent some more. But it didn’t break. So the shorts chickened out on Friday and started covering. The last hour was a stampede. There’s nothing more disconcerting than stampeding chickens.

But is it something more? The VIX says it’s an intermediate low, but intermediate cycle indicators say, xxxx xxxx xxxx (subscriber version). This week will be pivotal. Here’s the key.

Failure to xxxx xxxx xxxx  would xxxx xxxx xxxx. 

Cycle projections on the longer cycles point to xxxx-xxxx (subscriber version).

The 6 month cycle low is ideally due between xxxx and xxxx.

Third Rail Chart-  Resistance is around xxxx xxxx. If they clear that, the next target would be xxxx (subscriber version).

If they don’t clear xxxx , then another test of the low is likely. If they don’t xxxx xxxx xxxx (subscriber version), the crash will probably resume, with the next key support around xxxx.

Long Term Weekly- Long term cycle momentum has broken a 2 year uptrend, signaling that the bull market xxxx xxxx .. When long term momentum and 3-4 year cycle momentum break their midyear 2021 lows, and the SPX ends a week below xxxx, then I’d call it a bear market. That would imply that prices are headed a lot lower for a lot longer. We’re not there yet, but we will be quickly if this keeps up like last week.

I have revisited long term cycle projections. Last week’s move suggests more frequent updates than the usual quarterly schedule will be needed on these. So far, there’s no material change in the projections, but I now believe that they are wrong and will not be met. I explain why in the report. I’m giving these no weight, and instead focusing on the price patterns, support breaks, and cycle indicators to show us the way.

Monthly Chart – The market is now below two long term trendlines. It would need to get back above xxxx by the end of January to reverse the bearish implications of this break. If that does not happen, the target in February would be xxxx xxxx. Ouch.

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These reports are not investment advice. They are for informational purposes, intended for an audience of investment and trading professionals, and other experienced investors and traders. Chart pick performance changes week to week and past performance may not indicate future results, as you know. Trading involves risk, and these reports assume that you understand those risks and manage them according to your tolerance. 

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