first of all, it's obviously more art than science...due to the fact that cycles often invert. also, the CIT dates (change in trend, or turn dates) are usually assumed to be +/- a day. what's more, in the current quarter , and especially December, we have an unusual density of turn dates...and it is a bit of a guessing game what will be a high and a low. usually you can begin to gauge this as a turn date is approached. note btw. that many different methodologies are in play as well...
an important fact to keep in mind for the medium term is that two large cycles bottom in late Jan/early Feb.
so my attempts to guess specifically where the Dec. high will be are all with this in mind...i want to find the ideal point for entering Jan/Feb. S&P puts.
for the very short term, we have Dec. 8-11 as a turn date...since the market is going down, it should be a low, followed by a rally into expiration and the Fed meeting (which occur at the next turn point, Dec. 15/18). Dec. 15 is also a Bradley high. what argues for this scenario is that the most recent slew of warnings has failed to induce a breaking of the recent lows (slightly below 1300 SnP) and that the market traditionally rallies into expirations and Fed meetings.
however, there is a caveat, namely the ongoing deliberations of the Fla. Supreme Court...a Gore friendly decision would imo invert the next short term cycle, and produce a Dec. 15/18 low, followed by a Dec. 26/27 high, as mentioned by M. Henry.
if we leave this aside, it remains to watch what happens as we approach the possible turn...a rise in p/c ratios, market resilience vs. bad news, all would argue for it to be a low as expected.
so basically what you do with this cycle stuff is just be aware of the turn dates, and the events surrounding those turn dates, and watch the t/a evidence as we approach them to help you gauge whether up or down follows a turn date. |
