Category Archives: Stock Indices

The Beginning of Melt-Up

It was the 18th week in the weekly cycle as we finished 2017.  We thought the market would take this opportunity to create a little correction as the previous year’s high (also the current weekly cycle high) is a pretty tall order to overcome under normal conditions.  But the market condition is anything but normal, the 2017 yearly high was taken out on the 1st trading day in 2018!

Since the 2017 yearly high (also the weekly cycle high produced on 12/18/2017) was already taken out, we have to alter our cycle count.  The 5th weekly cycle was finished on 12/29/2017.  The correction that we were looking for will no longer occur, unless it makes sudden U-turn and take out the S&P 500 low at 2673.61. 

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The Outlook of 2018

It was a rare and extremely trending year in the stock market in 2017.  All we needed was to buy and hold.  What can we expect for 2018?  We expect big changes in 2018 in many aspects of the stock market as we can not step twice into the same river.  The market is in a constant flux and it’s highly cyclical.

The volatility cycle will return in the first half of 2018.  So just when we thought we have found the theme or tune of the market, it’s so easy to just go long with the crowd, then the market has a way of confounding the best of human minds.  In this blog we would like to go over the following few subjects and provide our forecast:

  1. Major indices price and time target forecast,
  2. Sector Analysis–where to place your money.
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Santa Rally 2017

The pending passage of the Tax Reform Bill reducing the corporate tax to 21% and taking effect January 1st, 2018 rather than being delayed until 2019, will be one of the biggest positive catalysts for US equities in decades.  The seasonal Santa Rally just got a solid footing for the market to finish a fabulous 2017!

The S&P 500 cash index has finished the 16th bar in the current weekly cycle.  It is expected for the index to make a new high in the 17th week, the week right before Christmas.  The sentiment is extremely bullish around this time of the year.  The S&P 500 in on pace to target 2700.

In a different model, we project the DOW to reach 25,648 by the end of 2017.  We also have a projection for the DOW to reach 28,045 by the end of 2018.  However, we are not clear about the two-year cycle low in 2018.  It is due for a two-year cycle low in Q1 2018, but the market can completely skip the two-year cycle as it has done in the past.  So we want to see how the market opens in 2018 to see the likelihood of a sizable correction to produce a two-year cycle low in Q1 2018.  We are kind of in a holding pattern in terms of deploying additional capital at this time.

While in this holding pattern, we do have a few short term trades in options.  We would open near money calls for $VIAB, $INTC, $XLK, $AAPL and $MSFT.  All these options expire on December 29th, 2017.  In other words, we wish to use these options to capture the final Santa rally in 2017.

Good luck and cheers for a fabulous 2017!

 

 

Trading vs Investing

pricentime

Several of the questions most frequently asked of us have to do with trading.  How do you define a trader?  Should you trade? Why bother trading?  Is it better to invest or trade?  Those of you who are veterans of the market battle know if you are more inclined to trade or invest. 

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S&P 500 Cash Index Cycle Location & Sector Analysis

Despite the non-stop geopolitical jittery and the traditionally weak summer seasonality for stocks, the bull market charged ahead and is showing no signs of abating at the moment.  After the brief two-week (8/11/2017-8/25/2017) and less than 3% correction, S&P 500 cash index bottomed on August 21st. 

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