Stock Market Indexes Confirm a Bullish Cycle Turn

By: Jim_Curry

From recent information to our investment advisory clients, the S&P 500 index has recently confirmed a 45-day (10-week) and 120-day (20-26 week) cycle bottom in place. The index did so by closing above VTL resistance (chart 1), which goes over top of a shorter-term cyclical component, the nominal 20-day cycle.

If the above is correct, then the index has better-than-average odds of registering new all-time highs again in the weeks and months ahead, with a current outstanding upside projection with the 360-day (18-month) cycle to 1574.22 - 1621.50 for the S&P 500 index..As for the NDX, this index has just confirmed an upside projection with the 120-day cycle to 2085.80 - 2148.20.

In terms of time, applying a numerical filter with the same cycles noted above, a projected path with price could see the indexes looking something similar to the green projection path shown on chart 2. Note that this projection is based on the Dow Jones Industrials on a weekly timeframe; to make such a projection requires a long-term data set (in this case, my data for this index goes back to the early-1900?s).

I should note that this green projection is in constant motion, and will adjust itself based on future price action. In other words, as long as price follows the path, then it will remain unchanged - but should price action start to deviate then the path will readjust itself for the future. However, even with the above said and noted, it may pay to look to buy a hard retrace off the top, some of which we saw in Tuesday?s session.

The recent technical action with both the breadth indexes (McClellan oscillator and Summation index) and also in the large number of new 52-week lows will normally suggest a re-test is going to be seen at some point. Should that occur in the month of September - which the projected path seems to favor - then those with a mid-term mindset can then be looking for technical indications to play the long side with the upper price targets in mind.

By Jim Curry
email: jcurry@cycle-wave.com
homepage: http://cyclewave.homestead.com/

Jim Curry is the editor and publisher of Market Turns advisory, which specializes in using cyclical analysis to time the markets.

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