Tag Archives: Two-Year Cycle

Bear Market Creates Opportunities Around the Corner

The sentiment is relentlessly bearish, the negative news and bearish forecasts are overflowing everywhere.  It feels no end is in sight.  Yes, the end is not near yet, but please keep it in perspective.  When this is all done and over with, you will be presented excellent opportunities that you wish you had in the last cycle.

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The Dow Jones Cycle Location 10/19/2018

The DOW had an inside day on last Friday and it was also an inside week.  But the DOW was able to close firmly above the 30-week MA while all the other indices closed below it.  The market is appearing to be temporarily stabilizing by having an inside week. 

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DOW Cycle Location 09212018

The DOW and S&P 500 both closed at all time high last Friday, yet the NASDAQ is lagging behind.  At the end of August, NASDAQ was in overbought condition with 8.81% over 30-week moving average.  The current three weeks correction has been supported by the 10-week moving average.

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S&P 500 Cycle Location 09072018

The first week of September proves once again that September is not a good month for the stock market.  The market had a mild selloff that was led by the small caps and NASDAQ.  As soon as the S&P 500 broke out the old January 2018 high, it fell right back down below the old high.

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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!