Thoughts For the Week Ahead

Last week I thought we would make a low in gold Jan 9 and the stock market Jan 12. It looks as though that elusive bottom will be a few more days out than expected. The normal 8 day cycle ran 12 top to top (something that sometimes happens around Holidays) running a cycle and a half. We had a similar cycle bottom on Oct 28 on the new moon. That being said, it could be we see a repeat of the 12 day cycle bottom and that projects a low on Jan 15. The 8 day cycle tops Jan 16 (Options Expiration), so I expect a powerful end of week upsurge to begin and last those 2 days. Down side projection is about 833 SPX. Before that occurs, we could easily see some kind of bounce Monday into the 4 day cycle top, whether from lower prices first (remember full moons reverse the prior trend going in) or immediately with a gap up opening (I favor the former, but we'll see). Gold stocks should bottom the day before the stock market and have a huge up day Thursday followed by a follow through top Friday. Downside for GDX favors the 26/27 area. The 7 day cycle top is due early Tuesday and could follow a bounce back by the equity markets. MSig (Mercury Retrograde) suggests choppy conditions ahead for the equities markets into early Feb. The bias should continue to be to the upside. An irregular top may be at hand around Jan 22 with a sudden move lower into Jan 23/26.

I'm still looking for some upside although it didnt materialize this week, my account his higher this week with some stocks that moved so no harm. A problem occurred in the RSI system, the RSI 9 component went into sell and needed to correct although the overall signal stayed on buy. If we go up this week I'm taking defensive action because there is a dip out there and can be nasty with bear mkt bias. And I'm seeing some stocks break down like the institutional arbitrary selling is starting again.

Blu: Merc retrograde works deviantly. It might make for choppiness in a bull market, but the opposite might be true in a bear market. What's the opposite of choppiness?

Courtesy of Raymond Merriman..
http://www.stariq.com/MarketWeek.HTM

With Mercury about to go retrograde, that determination may be an exercise in frustration for traders and analysts alike for the next 2-3 weeks. Very little is clearly understood during Mercury retrograde periods. There usually just isn’t enough information, facts or data to make a conclusive determination

Mercury is about to go retrograde again, for the first time since September 24-October 15. You might remember that period. That was when the banking system and the financial markets began their utter craziness. That was when Treasury Secretary Hank Paulson said the government needed to take $700 B immediately from taxpayer monies in order to rescue the financial system or economic Armageddon would occur instantly. That was when Obama transformed a 4-point deficit in the Presidential campaign to a double digit lead over Republican John McCain, and then coasted home to victory.

So what’s happening this time, as Mercury prepare to enter its new retrograde period, January 11-February 1? Well, Obama is about to be inaugurated as the 44th President of the United States on January 20, right in the middle of the Mercury retrograde period. And just this week, he—not Paulson—warns the Congress that they need to approve his new record-spending deficit program immediately or else we risk an economic meltdown. Same aspect, same message, same players, but different role. If he is not careful, Obama may find his honeymoon ends before it officially starts. People love Obama because he inspires, not because he alarms. He won because he was the calm voice in the midst of panic, not because he began to trumpet the panic. Everyone, on the count of three, say a prayer that Obama doesn’t do a “Paulson” and coerce lawmakers to hurry a decision on such important financial matters before the details and ramifications of his proposals are clearly understood. Once again, just like in September 2008, all these leaders would be advised to use this period for reflection and fact gathering. There just isn’t enough time yet for understanding these requests to make a mature and well-considered decision before February 1. Things are going to change and new ideas and new information is going to come out that is relevant to making a “best” decision. It isn’t there yet, not under Mercury retrograde. So leaders and leaders-to-be, listen carefully: Mercury is retrograde for three weeks. Chill out! Otherwise you are going to spook equity markets around the world and elicit doubts in your abilities to lead, because you are going to attract opposition. And the voices of the opposition will be heard under Mercury retrograde. This is a time to listen and consider, and not a time to demand action until all viewpoints are heard and considered. Otherwise there are apt to be errors in judgment and consequences to pay afterwards—just as we are discovering now after what transpired in late September and October, the last time Mercury went retrograde and the TARP (Economic recovery program) was launched and then changed several times immediately afterwards, to the annoyance of everyone.

I'm edging up my target a little from SPX 833 to 834/835. Tuesday and Wednesday should be big down days.