Stock Market Waiting for the Turn

By: Anthony_Cherniawski

The SPX Premarket is higher this morning. This appears to be the final phase of the rally, which may be gunning for the hourly Cycle Top at 2022.41.

ZeroHedge comments, “Several days ago, we pointed out a startling fact: short interest in the NYSE had risen to match the record level seen just before the collapse of Lehman!

We said that just as likely presaging another major leg down in equities, this move may simply mean the following: "a central bank intervenes, or a massive forced buy-in event occurs, and unleashes the mother of all short squeezes, sending the S&P500 to new all time highs."

Well, not quite, but they had a good shot at it.

Bloomberg adds another piece of the puzzle. It seems that Wall Street is using this rally to reduce margin debt.

Bloomberg comments, “Most people get concerned about margin debt when it’s shooting up. To Doug Ramsey, the problem now is that it’s falling too fast.

The chief investment officer of Leuthold Weeden Capital Management LLC, whose pessimistic predictions came true in August’s selloff, says the tally of New York Stock Exchange brokerage loans flashed a bearish sign when it slid more than 6 percent in July and August. The retreat took margin debt below a seven-month moving average that suggests demand for stocks is dropping at a rate that should give investors pause.”

I added some important Pivot dates to the hourly chart to take a look at some shorter-term opportunities (swing trades). You may wish to take note of the ability of the Model to forecast highs and lows. At the current time, most traders are dizzy because the market is not working on Trading Cycles. Instead, the operative Cycles are Primary Cycles (43 days). The operative rule here is to invest long or short and take profits at the Pivot Day or when the SPX has reversed from its Cycle Top, Bottom or mid-Cycle resistance.

TNX has apparently finally hit its mark This morning, also 3 days after its Primary Cycle Top (not shown yet).

More on this later

Regards,

Tony

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