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CyclePro
Fundamental and Technical Market Analysis
For Stock Indexes and Commodities
CyclePro U.S. Stock Market Outlook
Updated At Irregular Intervals
Send comments or questions to Steven J. Williams
Last Updated: 05/07/2001 16:47:14 GMT
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Welcome to CyclePro - Your web resource for Technical, Essoteric Analysis, and Market Forecast Commentary.
Table Of Contents
Introduction
Current Commentary
Fibonacci Day Counts
Fibonacci Wings
Bradley Siderograph
CyclePro Archives
Explanation of Terms
Crash & Elliott Wave Reference Material
CyclePro Research & Resource Links
Introduction
The current U.S. stock market appears to be following a similar path as was previously witnessed by U.S. investors in 1929 and 1987, and more recently by investors in the Japan Nikkei in 1990, Hong Kong in 1997, and many others. These were the most famous world stock market "crashes" of the century. We have already witnessed crashes in internet and high-tech industries during 2000, will 2001 also be added to this prestigious list for a "Crash" in the United States? Will the global economy crash too?
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Current Commentary -- Where Are We Now?
(Thursday 5/3/2001 PM): I think we are either at the top of our much anticipated wave 4 rally, or very close to the top.
The Bradley Siderograph signaled a turning point for one day either side of May 2, 2001. Since today was a down day, it looks promising that May 2 will be the final high.
The chart below is a sample study of the Siderograph. The faint cyan and yellow lines in the background are actually the Siderograph plot lines -- the cyan line is the major Siderograph while the yellow line is the exact opposite, or mirror image of the cyan line. You may recognize the gray bars in the background as the daily Nasdaq Composite chart. The heavier black line is the smoothed Nasdaq detrended line. One of the problems that Bradley, Gann, Langham, Bayer and others have pointed out is that planetary-based plots often times will "invert". Even Welles Wilder describes this irregularity in his book, "The Delta Phenomenon". But why inversions occur remains a mystery for many analysts that attempt to use these tools.
We have witnessed many times in the past where the Siderograph uncannily predicted accurate turning points, simply by noting the days when the Siderograph line changed direction. This technique did not alert us in advance whether the turn would be at a top or a bottom... only that a turn was perhaps likely.
In this chart, the red line is the Siderograph that has been "corrected" for inversions. For example, notice the five vertical green lines. This is precisely the point that I chose to flip the Siderograph from either the cyan line or the yellow line. You can compare the red line versus the others to see which one is used for each segment of the line. While I must caution that this technique can take virtually any random line and using perhaps unlimited "corrections", form-fit it to a stock chart... but in the case of the Siderograph chart below, I have only allowed for 5 distinct corrections to the major Siderograph line. Even with these few corrections, the rises and falls of the red line seems to follow rather closely with the Nasdaq chart -- perhaps not perfectly -- but certainly a majority of the rises match with rises and a majority of the declines match with declines. You be your own judge.
The trick to this technique is to determine when inversions occur... in advance. If I knew the answer, I'd probably be writing my Cyclepro Outlook updates while lounging on the deck of my Virgin Islands beach house.
By the way, don't get too hung up on trying to figure out what the inversion days are, I simply eye-balled them for this demonstration.
Click chart to enlarge.
Fibonacci Wings: The following are updated "Fibonacci Wing" charts for 144, 89, and 55 day wingspans:
Click charts to enlarge.
Please note, the 55-day chart targeted May2 as a turning point, while the 89- and 144-day charts both target Monday, May 7.
Forecasts: The Nasdaq Composite may very well have completed its wave 4 rally Wednesday, May 2. The confirmation will come when it trades significantly below 2095. A move above Wednesdays high of 2233 says the patterns are in fact not complete and we will be looking for a distinct 5 wave rally up today's low of 2129. I give the probability of about 70-30, 70% that the wave 4 has completed, and 30% that we go higher. Already, our wave 4 has retraced 48% of the whole move down from January 24 to April 4.
I am getting a primary number of Fibonacci-related price hits in the area of 910 to 1030, and a secondary cluster around 1470-1500 area. This suggests that the next move down should draw the Nasdaq down to at least the 1500 area before a meaningful pause, but eventually we should see Nasdaq down BELOW 1000.
For Fibonacci timing, I am also getting two distinct scenarios. Reaching the Nasdaq 1500 area could occur as early as Tuesday, May 29 (the day after the Memorial Day holiday), but as late as Friday, June 8. If the Nasdaq is declining through the 1500 area, then we should be looking at hitting the 1000 area as early as Friday, June 16 (triple witching options expiration day) or as late as Thursday, July 5 (the day after the July 4, Independence day holiday). If May 2 was not the wave 4 top, then both the time and price forecasts will have to be adjusted accordingly.
Click chart to enlarge.
If this is the bearish case, then is there a bullish scenario? I am definitely a bear, however, I cannot overlook chart patterns that have the potential of a bullish outlook. The following Weekly DJIA has a pattern completing that is very similar to a flag or pennant formation. These are most commonly continuation patterns. Thus, if this was all I had to go by, I would be lead into believing that the DJIA is ready to charge higher. With normal Elliott Wave, after the completion of the 5th corrective wave, ie: a-b-c-d-e, the counter move is usually quick, and impulsive. Without any more to go on, this fairly well describes the DJIA reaction up from 9107. The possibility of a complete divergence between DJIA and Nsadaq is too much of a strain that something has got'ta give. Simply put, the DJIA is not going to rally higher while the Nasdaq ratchets lower, and lower. While these two indexes do not always move lock-step every day, they do tend to move in the same general scenario. Unfortunately for me, it will require the DJIA to trade above 11,000 to get my ears to perk up, and certainly a move above 11,750 (previous all-time highs) to get me to re-assess the longer-term outlook. |
