On our way downwards

In the latest market review we posted on April 12th 2011 we forecasted: ” We are now very close to the probable time and price target.., and we will definitely experience quite some resistance.. , …with a likely price target of 1352 on the S&P500 +-20 points…, ..most likely price target of 1358.55.., ..and a mid-term turning point any time from now(april 12th) and end of May 2011..; in picture shown April 29th +- 1 month as the likely time target. We were right, and we were on our way downwards in all the major stock market indices since the time and price target mentioned in the late april forecast.

We were ten very carefull in our time forecast given the wide range mentioned for a crest to occur. Tops can be difficult to forecast. In hindsight our forecast nailed down the high on the S&P500 exactly at April 29th. Notice that the top at 29th april was the highest close of the year) at 1363.61, only 5 points away from our  predicted most likely price target of 1358.55

At major support level

On the S&P500 we now arrived at the 21 month moving average, around the 23.6% retracement of the last leg up, as well as on the next Gann angle that connects the bottom of 2002(lowest close) with the current market price.

SP500 Market Position August 4 2011

The current level we are now on could form some intermediate support, but there is a good change the market will continue downwards after some retracement in the next few weeks to come to the 50% retracement levels or even more.  However, expect the unexpected. The market is currently very volatile, with wide swings, so don’t try to catch a falling knife. Wait for confirmation and the stock market to settle down first.

The odds are declining for a bull market to continue

We have made quite a tumble from the top of the bull market. The top for the S&P500 made on April 29th 2011  could well be a final crest in the current bull market but not necessarily. It is still too early to call. We could well be in a corrective wave, possibly a Elliott Wave 4 of some degree.  However the odds that the bull market will continue is rapidly declining.

We are now at the 21 month moving average support. If we fall through for two months at a row most likely this will likely confirm the crest has been set and we have started a new bear market. For the S&P500 the 21 month moving average is now approx. at 1201 in price and the current market price at 1199.38.

Due to all the other reasons mentioned in the above picture, on the Gann angles and Fibonacci relationships, the top of April 2011 in most markets is a major top, not likely to get passed easily.

Don’t miss the next turn

We sure have a fair idea where the market is heading in price and time in the coming months and years. Stay tuned.

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© 2001-2011 MarketTimingCycles.com. Reproduction or use of this material is allowed only upon prior consent of the publisher. This article is not part of a paid subscription service. It is a free service and is aimed to educate and demonstrate the successful application of cycle analysis. At no time will specific security recommendations or advice be given. Whilst the information herein is expressed in good faith, it is not guaranteed. A trading system that never makes mistakes does not exist. Error and uncertainty are part of any effort to assess future probabilities. Trade at your own risk. Read our full disclaimer and Terms of Use.

Critical Juncture Ahead in World Stock Market Indices

In our latest post back in January 2011 we have posted: ” The time is ticking away for World Indices to correct for a medium term correction in a possible longer-term trend. The market is not likely to start its medium term correction before mid April – mid May 2011. There is a confluence of cycles coming together at that point in time that will cause the market likely to correct between 10-20%. It is still unclear of this will be a steep and quick correction or that this will take more than several months”.

We are now very close to the probable time and price target mentioned in our previous article for a medium term crest to occur.  So let’s have a look where we are right now and what other information could confirm this as well.

In the current market position as seen in the S&P500 and many other world indices we are now approaching a significant crossing. According to Gann you should watch 7 years from any important bottom or top. You will find many culminations around the 42nd month. We are now approaching the 42 month measured from the top in 2007. We are also drawn to an important Gann angle that could cause quite some resistance to cross.

This juncture has Fibonacci relationships of quite some significance as well and a first leg of a 4 year cycle is unfolding in a top as well. Decision points in stock markets are often seen at these points in time and price. Will this juncture be the end of the current bull market?

An important Fibonacci & Gann juncture
Decision points in Stock markets are often seen at Fibonacci related junctures in time and price and/or on Gann angles. The stock market is now approaching such a juncture and could possibly unfold end of April – end of May 2011.

SP500_April1111

Between the high of 2007, the low of 2009 and the high of 2011 a symmetrical triangle is formed of which each side is 1.618 times the other sides, measured in months. Notice the third leg from mid 2010 has a 0.618 Fibonacci relation with the first leg from the bottom in 2009 to mid 2010 measured in price as well. Be aware that the number 42 is a double Fibonacci number ’21’, the same applies to the number 16 (double ‘8’) and the number 26 (double ’13’).

The possible crest around end of April 2011 also lies on an important Gann angle, connecting the bottom of 1987 with the expected heights in end of April/end of May 2011.

Likely price target for the S&P500 at that point in time is 1352 +- 20 points. We have reached that target window already a few days ago. However, the expected deviation for this likely top to be forming is +-1month as seen from end of April 2011. It all depends if you connect the lowest low, or the lowest close, or the highest close or the highest high with each other, if the trough or crest is formed in this month or the next/previous month.

The 4 year cycle high
The above mentioned point in time coincides now also with a first leg of 4 year cycle (see the chart in our previous article) unfolding in a crest. See update below.

SP500_2_April1111

We have now arrived at the projected time and price we forecasted on January 26th 2011. I would be very cautious now. The market can become very volatile shortly afterwards. If you study at what happened each 4 years ago from now, you will notice many similarities with the current market conditions. If past cycle behaviour repeats itself, the 4 year stock market cycle could still bring us later on to higher heights, somewhere between October 2011 and March 2012.

Do take care, the volatility will likely be high at the end and/or beginning of a 4 year cycle!

Conclusion
We are approaching an important decision point in the stock market. This could also be a final crest in the current bull market but not necessarily. It is too early to call. It is still indecisive if this bull market is on its last leg. Be aware, the probabilities of past 4 year cycles behaviour shows that a downturn is likely to occur at this juncture for some time after which we could continue into new heights to culminate in a final crest for this bull market somewhere between October 2011 and March 2012. We will come back to that later on.

A good measure if the bull market is over is the 21 month moving average. As long as we stay above the 21 month moving average we likely remain in the current bull market. If we close below the 21 month moving average the odds are very high we have started a new bear market. For the S&P500 the 21 month moving average is currently at approx. 1152 in price.

For now we will definately experience quite some resistance and a mid-term turning point any time from now and end of May 2011 with a likely price target of 1352 on the S&P500 +-20 points. Notice we have arrived at that time and price window. So, I would treat this stock market very carefully.

We will post more analysis as the market develops in the next few weeks. Take care and stay tuned.

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© 2001-2011 MarketTimingCycles.com. Reproduction or use of this material is allowed only upon prior consent of the publisher. This article is not part of a paid subscription service. It is a free service and is aimed to educate and demonstrate the successful application of cycle analysis. At no time will specific security recommendations or advice be given. Whilst the information herein is expressed in good faith, it is not guaranteed. A trading system that never makes mistakes does not exist. Error and uncertainty are part of any effort to assess future probabilities. Trade at your own risk. Read our full disclaimer and Terms of Use.

Time is ticking for World Indices

The time is ticking away for World Indices to correct for a medium term correction in a possible longer-term uptrend. Last week we mentioned: “A short-term top in World Indices has likely been set. In last two articles we mentioned we expected a top to be formed around January 18th – January 21st 2011, with the FTSE100 and S&P500 as an example.  There is a high probability (80%) that the expected short-term top has been set yesterday. The volatility and the move downwards is exemplary for a change in trend.”

We hold the opinion that this short-term correction will have a very short life, and may already have occurred. At the moment we are consolidating due to the stronger cycles to drive the market upwards,towards the mentioned confluence of cycle to complete in time, while the smaller cycles are trying to correct on the short-term but are weaker. See below example on the S&P500.

The market is not likely to start its medium term correction before mid April – mid May 2011.
There is a confluence of cycles coming together at that point in time that will cause the market likely to correct between 10-20%. It is still unclear of this will be a steep and quick correction or that this will take more than several months. Probable Time Target: mid April to mid May 2011. Likely Price Target: 1358.55 on the S&P500.

Be aware any correction on the short-term as mentioned in our earlier articles of 2011 can still happen between now and Mid February. Take care!

As long as we stay above the lows of July 2010(on S&P500: 1010.91) the market is likely to  continue upwards after the mentioned correction of April/May this year. We will publish the most likely dates and targets beyond April-May 2011 for the mid-term forecast to our paid subscribers only.

We will post more analysis as the market develops. Take care and stay tuned.

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© 2001-2011 MarketTimingCycles.com. Reproduction or use of this material is allowed only upon prior consent of the publisher. This article is not part of a paid subscription service. It is a free service and is aimed to educate and demonstrate the successful application of cycle analysis. At no time will specific security recommendations or advice be given. Whilst the information herein is expressed in good faith, it is not guaranteed. A trading system that never makes mistakes does not exist. Error and uncertainty are part of any effort to assess future probabilities. Trade at your own risk. Read our full disclaimer and Terms of Use.

Short-term Top in WorldIndices has likely been set

A short-term top in World Indices has likely been set. In last two articles we mentioned we expected a top to be formed around January 18th – January 21st 2011, with the FTSE100 and S&P500 as an example.

There is a high probability (80%) that the expected short-term top has been set yesterday. The volatility and the move downwards is exemplary for a change in trend.

We expect a short-term bottom to occur around the first/second week of February 2011. How shallow or deep the trough will be, is difficult to say. We expect a 4-9% correction in most indices towards the Fibonacci 50-61,8% retracement zone, after which the market will likely continue on the main trend. See below chart on the S&P500

Be aware. The market position we are in is comparable with the market position, patterns and volatility 12 years ago. It seems that a powerful 12th year cycle is recurring in a similar way as twelve years ago. So, be prepared to see quite some volatility ahead and be carefull.

We will post more analysis as the market develops. Take care and stay tuned.

Join a group of select individuals and subscribe to our free newsletter here and we will put you on our mailing-list. We respect your privacy. We don’t sell, rent or share your name or email address.

© 2001-2010 MarketTimingCycles.com. Reproduction or use of this material is allowed only upon prior consent of the publisher. This article is not part of a paid subscription service. It is a free service and is aimed to educate and demonstrate the successful application of cycle analysis. At no time will specific security recommendations or advice be given. Whilst the information herein is expressed in good faith, it is not guaranteed. A trading system that never makes mistakes does not exist. Error and uncertainty are part of any effort to assess future probabilities. Trade at your own risk. Read our full disclaimer and Terms of Use.

World indices awaiting a short term correction

Last week we wrote: “The world Indices are due for a short-term correction, but the larger trend is still bullish.”  We noticed that many indices around the world have made new highs. How long will this bullish trend continue? The larger cycle is not likely due yet until early april. However, the smaller cycles are due for a short-term correction, but their impact on the correction could be diminished because of the strength of the larger cycle which in its end phase  is always very strong.

World Indices due for a correction

The world Indices are due for a short-term correction, but the larger trend is still bullish. On January 10th last year we wrote: “The S&P500 has now touched the current upper trend line as formed since early last year. On January 15th 2010 we are also 45 weeks or 225 trading days after the March 2009 bottom. In Gann terms this point in time is typically a hard angle that typically come in as a high.”  We now seem to be exactly at the same time for a correction to occur.

S&P500, half way towards the medium term bottom low

On January 10th, we wrote: “The S&P500 has now touched the current upper trend line as formed since early last year. On January 15th 2010 we are also 45 weeks or 225 trading days after the March 2009 bottom. In Gann terms this point in time is typically a hard angle that typically come in as a high. We expect the market to continue its trend towards this important mid-point in time. Next to this, we are also approaching a dominant natural cycle that is forming its crest. On the short-term we expect the dominant cycle to approach its crest early to mid January 2010 on the S&P500. The cycle crest can form as early as January 8th or as late as the end of January +- 4 trading days, with January 15th as the expected mid-point of the cycle”.

S&P500 Cycle crest approaching

In last December’s reviews we wrote : ” The current Elliott wave scenario suggests we are on a wave 5 of A of a wave 2 counter trend on the S&P500 and many other indices around the world. Fibonacci and Gann targets suggest the Wave A of 2 to be formed at the 62% Fibonacci retracement in price and time; at which point the S&P500 is in perfect harmony. Our dynamic market timing cycle model is further suggesting the current trend will likely continue into  early 2010, after which a correction of some degree is likely to set in. Be aware this only could be a minor correction.”

The year 2009 in retrospect

We have published recently our MTC Annual Forecast for 2010 based on the methods we have applied in 2009.  Over the year 2009 we have published and commented on our forecasts frequently on our blog in retrospect . This was due to the fact we never published our static stock market forecast a year ahead before, but only sticked to our dynamic forecasts a few months or weeks in advance.

If however we would have published our static forecasts a year ahead in 2009 would it have been any good?  The answer might surprise you! Read more on this in the article: “An overview of our Stock Market projections in 2009“.

MTC Annual Forecast 2010

In the course of the last 40 years studying the stock markets, I was most influenced on my research in developing forecast models for the stock market by men like: Carolan, Copan, Dewey, Elliott, Gann, Hurst, Merriman, Millard, Sloman,Wilder,(to name a few), and many others. In my writings you may find from time to time the influence of these masters traders and forecasters.

The forecast or roadmap for 2010 is largely based upon the concept of Gann’s Annual forecast, and the work of Jim Sloman on the Delta phenomenon. As Gann mentioned in his original forecasting course:

“Every movement in the market is the result of a natural law and a Cause which exists long before the Effect takes place and can be determined years in advance. The future is but a repetition of the past, as the Bible plainly stated: ‘The thing that hath been, it is what which shall be; and that which is done is that which shall be done, and there is no new things under the sun.’ Ecc.1-9.

Every thing moves in cycles as a result of the natural law of action and reaction. By a study of the past, I have discovered what cycles repeat in the future”  from W.D. Gann’s original forecasting course

How did Gann made up his Annual Forecast?