S&P 500 CASH
SPX CASH: Daily Projected Support and Resistance levels: High - 1246; low - 1231
SEPT SP: Daily Projected Support and Resistance levels: High - 1253; low - 1238
SPX CASH: 5-Day Projected Support and Resistance levels: High - 1255; Low - 1210
SEPT SP: 5-Day Projected Support and Resistance levels: High - 1262; Low - 1217
SPX CASH: Monthly Projected Support and Resistance levels: High - 1316; Low - 1245
SPX CASH: Yearly Projected Support and Resistance levels: High - 1331; Low - 1192
From previous outlook: “As per the notes from recent days, the 10 and 20 day cycles are in normal bottoming range here, but for now there is no way to know if these have bottomed - or whether a lower low is still out there. With the short-term trend being hard down in recent days (and today‘s consolidation near the low end of the range), the odds may still favor the latter, though don’t rule out the former. I thought that we would see this resolved in Monday’s trading, but that was not seen and so the verdict is still out. Either way, should the SPX now take out Friday’s 1228.45 intraday low, then the probabilities would be much lowered for a run to or above the highs again on the next 20 day up cycle, simply based on the fact that most of these will not see their declines lasting for more than 9 trading days if they are going to make a higher high on the following swing up. I would say that this is true regardless of whether the 1219.29 swing low holds the downside for this swing.”
Current analysis: The SPX made a quick opening higher with the September futures, early on hitting an intraday peak of 1239.86. This level proved to be a brick wall of resistance, with the index then turning hard to the downside into late-afternoon trading, here pushing all the way down to a session low of 1224.54 before making a firm upside reversal to the upside into the closing bell. Volume in Tuesday’s session came in at 1.69 billion shares, which is an expansion of better than 15% from Monday’s levels. And, coming on a day where a lower low was registered, this indicates better than average odds for today’s low being seen again after whatever rally is seen off this low.
With the late-day reversal to the upside, there is at least decent odds now that the 10 and 20 day combo lows are now in place at today’s 1224.54 swing bottom - with the best confirmation of that being taking out Monday‘s 1240.07 intraday high on Wednesday. Of note is that today’s new low was accompanied by technical divergences both now on the hourly and on the daily charts, and the hard late-day reversal would tend to add weight then to a 10/20 day combo low in place. If any of the above is true and we do take out the 1240.07 level in Wednesday‘s trading, then the index should try and work it’s way back to the declining 9 and 18 day moving averages in the coming days, which are both right now at or near the 1254-1255 region - right at or near the current weekly projected resistance high (1255). In terms of time, if a confirm of a 10/20 day combo low is in fact seen, then the odds will favor at least a couple more days of upside, as about 90% of the 10 day down cycles that have seen the pattern of a ‘lower-low’ have seen their rallies lasting at least 2 trading days before topping out. After the normal 10 and 20 day combo rally, what comes next is now a big question mark here, with the world now having been flipped upside down in this inversion window.
Remember that the 45 and 120 day cycle statistics indicated that the probabilities favored the SPX not having seen the peaks for those two components made until on or after 7/12/06. The highest high seen was of course the 1280.38 swing top seen on 7/3/06, and then we have since corrected the whole move up from the 1219.29 swing low from June. That June low is still the key downside level to void these statistics with the larger cycles, but I should add that both the NDX and the DJIA have taken out their June price lows already - indicating that the SPX may not be far behind. Either way, simply the fact that the SPX made lower lows into today’s session is a negative in itself, as I had noted in recent days that the 20 day up cycles that went
on to take out their prior peaks saw their bottoms made usually on or before the 9 trading day mark. Since Tuesday’s session was day 10 into this down cycle, the inference is now that the probabilities are now much lower for the SPX to try and make a new swing high on the next 20-day up phase. Having said that, inside this inversion window and anything is possible. Lastly, I have not mentioned it in a while, but there is a larger Bradley turning point (chart above) that is in this 7/18/06-7/20/06 timeframe, and we obviously see if this turns out to be anything meaningful in light of the current price and technical action.
NASDAQ 100 CASH
Daily Projected Support and Resistance levels: High - 1491; Low - 1460
5-Day Projected Support and Resistance level: High - 1501; Low - 1430
Monthly Projected Support and Resistance levels: High - 1654; Low - 1545
From previous outlook: “For the short-term here the dividing line between minor strength and weakness I think is today’s the 1576 region. In other words, if taken out to the upside then the odds are going to favor some continuation higher back towards the 1500-1511 area, which is now seen as both the current weekly projected resistance high and is also the prior swing low from the month of June (which is now first resistance to any move up). On the flip side, below this same 1576 level and the index can easily go down to make new swing lows for the move in the days ahead, even with the short-term divergences with technicals and price on this index.”
Current analysis: As with the SPX, the NDX also rallied into an early-day high, here initially taking out the 1576 level early on. However, from that high prices then reversed hard to the downside into later in the afternoon, running all the way down to a new swing low for the move with the tag of 1446.77. That move also proved to be shortlived, as the index then reversed hard in late-day trading to actually end the day to the upside. Volume ame in at just over 2 billion shares, which is a 30% expansion from Tuesday’s levels and should indicate another run to the lows will be seen after whatever short-term plays out.
On the positive front, we still have these new lows in price being accompanied by diverging technicals, though this has obviously not mattered much since the break of the June lows, with the index continuing to slice on lower since then. Either way, both the 10 and 20 day cycles are now on their extended ranges for a low, and are thus both due for their normal upside retracements back to the 9 and 18 day moving averages or higher, which you can see are in the low-1500 region at this time. However, I will add again that there is still at least the potential for an eventual try at the 45 day moving average, which was not hit on the last upward phase. And, anytime a moving average is not hit on a normal up cycle phase, then there is always the upside risk to that moving average; we saw that with the SPX and the 120 day moving average back in the March/April timeframe of this year. Short-term, look for the daily projected support low to try and hold any new downside for the next day or three and for the index to try that run back at the 9 and 18 day
moving averages.
Jim Curry
Market Turns Advisory
Email: jcurry@cycle -wave.com
Disclaimer - The financial markets are risky. Investing is risky. Past performance does not guarantee future performance. The foregoing has been prepared solely for informational purposes and is not a solicitation, or an offer to buy or sell any security. Opinions are based on historical research and data believed reliable, but there is no guarantee that future results will be profitable. The methods used to form opinions are highly probable andas you follow them for some time you can gain confidence in them. The market can and will do the unexpected, use the sell stops provided to assist in risk avoidance. Not responsible for errors or omissions. Copyright 2006, Jim Curry.
