comments and outlook for 08-05-2011

Maybe given my miss today I should give up on making daily calls.  Totally missed the call for today.  What happened?  Can't be sure, the next few days may clear up what happened.  Though - if you have been following the conversation between Shadow7 and I you know we have been discussing the timing of the 20 week cycle bottom.  We may have gotten that bottom today???

When it comes to longer cycles in theory most of the actual downside will occur in the last 15% or so of that cycle's down leg.  For the 20 week cycle that would be 15% of 10 weeks or about 1.5 weeks.  So I took a look to see what level we might expect based on the 34TD cycle and 20 week cycle bottoming this week.  This ignores the effect of shorter cycles  - I was looking for a possible explanation not exactitude.  The 20 week cycle has about 80 points of amplitude.  The 34TD cycle also has about 80 points of amplitude.  So that is about 160 points of potential down side if these  two cycles bottomed together.  We started this down turn around  1356.   1356 less 180 is 1176.   So this allows for some 24 points of up side from the 22TD cycle over this period. (which topped and turned down within the last 3-4 days.).  So this is a possible explanation - the 20 week and 34TD cycle bottoming together (within a day or so of each other).

Like I said - the next week or so should tell the story, I was not expecting these levels until mid August when I expected the 22TD cycle and 20 week cycle to bottom together.  So if the 20 week cycle has/is bottoming  the mid month bottom will be less severe than I expected.  Some of today's weakness may bleed into tomorrow, but we may have seen most of the selling for now.

So lets say we see some weakness early and then get some buying and close to the upside (this assumes we did see the 20 week cycle bottom).  Here is a visual of the shorter cycles:

Gl traders.  Do your own analysis and be careful.  Had stop stops hit today and avoided extreme pain.