12-01 cycle analysis S

It appears to me this stock should be avoided at this time.  A break below $3.68 is possible. Two cycles top within 3-4 days and this stock is near recent lows.  It has been making lower highs and lower lows.  This appears to be a high risk stock at this time....

See for yourself:

11-29 What does 2011 look like?

If we look at cycle alignment then 2011 should be simliar to 2001.  The exception being the period of 5-6 weeks following Sept 11, 2001.  This was a one time event that should not be repeated in September of 2011.  Of course there could be other events in 2011 that could affect this hypothesis.  Still I believe 2001 is the best template for 2011.  

The 10 year cycle bottomed in 2002 and should do the same in 2012.  Same relative position as in 2001 - check.  The 24 month (2 year cycle) is a factor of 10 (10/5 = 2) so it should have the same relative positioning in relationship to the 10 year cycle - check.  The 3.39 year cycle is about 1/3 of the 10 year cycle (3.33 years would be 1/3) so its alignment should be shifted .18 of a year ( 2.16 months or 64 days) forward from its bottoming relative to the 10 year cycle in 2002. From a purely rational view 2001 should be the best pattern match  (with the noted exceptions)  for 2011.

With this in mind I have  done a crude projection for 2011.   From late Jan to  mid Mar the 10 year, 3.39 year, 2 year, 1 year and 4 month cycles should all align down.  So the low for the year could be around the end of the third week of Mar (estimate 925 - may be too high).   The high for the year could be 3rd-4th week of Jan or mid May (estimate avg 1150).  The latter part of the year you have the 1 and 2 year cycles up.  This will offset (at least in part) the downside of the 10 year and 3.39 year cycles.  So I would expect the 4 month cycle to be relevant from Aug-Dec.

Warning: The following depiction is for visual representation of the above discussion  only and should not be relied upon for trading.

11-27 cycles updated for December

On Nov 13 I told you:

"As a dominant cycle reaches a top it exerts less effect as it starts to flatten out before turning down. This means less influence on the direction of the market. It also implies that the shorter cycles should exert more influence and a larger effect on market movement. So instead of day after day after day of the market moving up with a rare down day thrown in you get fewer up days and more down days. This makes for a better short term trading environment, but it also makes timing moves trickier. You get increased volatility both up and down.

As the topping process progresses you start to get more down days than up days. Just realize though the topping process for a longer cycles can be several days (2-3 weeks or more). In other words longer cycles have a longer turn radius than short cycles so we should not expect a sharp sell off the day after a long cycle tops, but a slow start that gains downside momentum over time."    Check.

Last week end I told you:

"So I expect the first part of the week to show some weakness (maybe test the 1173 area) and then a Thanksgiving rally to start. In other words the week should be choppy with little movement by the end of the week."    Check.

Mid week I told you:

"There may be a chance for a short term trade on the long side if we have the market opening down tomorrow morning. I view it as a fairly high risk trade and suggest if you take the trade you be careful and don't get greedy....."   Check.

I know, what am I going to do for you now!!!  I'll give it my best shot.  I believe we are in a confirmed down trend and next week will be choppy as we have one shorter cycle topping and 2 bottoming.    When the week is over I expect the week to be lower by Friday's close than the close this week (with a better than 50% chance we break below the recent 1173 lows during the week). 

I also wanted to give you a longer view for the month of December.  The market will remain choppy with a downward bias the first 2 weeks of December.  The cycles align to the downside and we could get a more substantial sell down the second half of December.  The "selloff" that stole Christmas?

Here is the SPY (with my December projections):

11-25 CREE revisited

With the sharp move up Wed we need to take a new  look at CREE.  It appears we have had 1 cycle topped and another ready to top.  You need to move stops up and may want to consider selling part of your position.  CREE could try and close the gap from August (another 5 ponts or so up), still you do not want to give back all your gains on that possibility...

Here is a current chart:

I am thankful to the people who helped make this blog better

You have offered suggestions for some stocks to analyze and offered feedback.  I am amazed at how well many of those picks have done.  I would suggest my readers/followers are better than most of the traders you encounter on the web.  I thank you for your suggestions as it makes me look like I know what  I am talking about.  You have been great.

Here are some stocks suggested by readers for analysis:  BUCY, CREE, CF.  All have done well or very well.   Also, I charted OIL for a reader interested in that commodity.  It has completed a complete cycle of buy, sell, buy which we documented.

So I am thankful for such well informed readers/traders and hope you will continue to help make this site relevant.   I encourage you to express  comments/opinions.

11-23 mid-week update

I told you over the week end I expected the first two days to be down.  The view for the remaining 1.5 days of the week is not real clear as we have 1 shorter cycle still to bottom and the 45 day cycle will top early next week.  There may be a chance for a short term trade on the long side if we have the market opening down tomorrow morning.  I view it as a fairly high risk trade and suggest if you take the trade you be careful and don't get greedy.....

Overall I still think Wed-Fri will be up, but given it is a holiday period trading it may be boring without a lot of movement on low vol.  The best advice may be to set stops and take Wed and Fri off.

Here is the SPY:

11-23 Looking back part III

I look back to see how I have done.  As I noted last time I looked back I don't always hit the ball.  I was too pessimistic on APPL and AMZN.  Since then APPL hit my revised target of $300.

I posted a chart of BUCY in late Oct and noted it was a buy.  This would have been a bases loaded home run.  I wish I could claim I saw a buyout coming.  I didn't.  BUCY analysis was requested by somone else.  Sometimes you get hit with dumb luck.  Still I saw it as a buy.

Another stock I covered was CREE after a pullback and noted it was a buy with an initial target of $54.  It has gotten over $58.  If I had revisited it a couple  weeks ago I feel confident I would have upped my target.  Regardless, I played calls 3 different times when CREE was in the $50-51 range for some nice profits.  If I had had the funds available I may have bought the stock.  But, between long and short positions I  did not have funds to do so.

It appears that CREE is near a top and if you own it then you should tighten your stops to preserve profits.  Here is CREE:

Have a great Thanksgiving.