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Another Rally From the Valley, Ho Ho Ho

SPX cash left us with a 2 day cycle projection of 1318 at yesterday’s close. Say bye bye to that. The new projection is 1328. A 3 day cycle projection points to 1326, and a new 5 day cycle projection resulting from this morning’s gap open points to 1329. Resistance is suggested at a 5 day cycle channel line right here at 1322 where the opening surge stopped dead, with the next resistance likely in the vicinity of an 8 day cycle channel line at 1327.

The pullback following the opening surge has broken an 8 day cycle line at 1319. The next support would be a rising 5 day cycle line at 1315, followed by the falling 8 day cycle line at 1314. There are no sell signals yet on 2 and 5 day cycle oscillators. However, there are sell signals on the futures (see below).

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Here’s the cash SPX chart (time stamp in lower right corner).

SPX Cash - click to enlarge

The SP futures (or ES electronic mini S&P) rally peaked at 6 AM NY time, and just retested that high in the last half hour. They’ve essentially traded sideways in a tight range since 4 AM moving toward the rising 2 day cycle centerline now nearing 1312. That should be support. The next support would be in the area of the 5 day cycle centerline at approximately 1308. 2 of the faster 2 day cycle indicators have gone to the sell side, while the 5 day cycle oscillator is in a steady rise.

Here’s a look at the Spoos 30 minute bar chart (time stamp in upper right corner).

S&P Futures Intraday Chart- Click to enlarge

Blue lines more or less represent the nominal 5 day cycle. Red lines more or less represent the nominal 2 day cycle. The first oscillator more or less represents the 5 day cycles. The 3 lower oscillators more or less represent the 2 day cycle. Cycles vary in length and are not the sole component of price action. Outside influences and random noise may have a significant impact at any time, often unpredictable. These charts and their interpretation are meant for educational, informational, and entertainment purposes only and are subject to the Wall Street Examiner terms of use.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 


  4 comments for “Another Rally From the Valley, Ho Ho Ho

  1. January 31, 2012 at 9:56 am

    2 and 3 day cycle projections pull back to 1320-21- done. 5 day cycle projection invalidated. We’s been suckered!

  2. January 31, 2012 at 12:42 pm

    Support held around 1308, and the 2 day cycle indicator looks poised to turn up from around the zero line. Big rally if it does, but problem is that 2 day cycle projection is down around 1303. Gotta hold fire.

  3. January 31, 2012 at 2:29 pm

    2 day cycle has turned. New projection 1317.

  4. January 31, 2012 at 4:45 pm

    The little dip in AMZN after the close aborts incipient 2 and 5 day cycle buy signals in NDX futures.

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