Major TTT opportunity May 14 - 16

Thus far, the roadmaps have proved to be quite reliable as part of your trading strategy.  When everyone and their mother was calling for a top, the roadmap #1 continued to call for higher highs into early/mid may.   May 1-3rd as previously mentioned was a key point as if that was a low, then roadmap #2 would have been the likeliest scenario.

So, lets focus on whats ahead.

I had figured 1600 - 1610 was the high for May 14 - 16 timeframe however since we are past that, and the trend line suggests that if we do go as high as the upper channel top, we are looking at a high of 1650.  While that doesn't seem possible for me, I will just work with what the chart is telling me.  Its more important that time is correct rather than price.

So what I've illustrated below is the current scenario using a rising wedge from the 2011 Low, that we are sitting at the top of, and I'm also using an upper trend channel the S&P finds itself in (better for shorter trading timeframes).

I don't hold too much stock in the upper green line partly due to the fact the S&P had already broken through it previously and hence why we are moving to the upside still, but the lower red line is still important as we look forward.   If the S&P continues in this channel to the May 14 - 16 timeframe, then we are looking at a 1650 price.  However I just posted the main alternate roadmap which is showing May 7th as the next high, and if that ends up being the case, we are looking at 1640.

The drop according to the primary roadmap is going to be roughly 18%, so we are looking at a 50% fib retracement of the bull move off the Oct 2011 low.  You will notice how this would significantly violate the red trendline and this is would mean that the next peak will be a lower high, as per Roadmap #1 around late Oct early Nov.

May 21st is an important date to know if roadmap #1 continues as primary, or if we should be looking at the main alternate roadmap  which takes a different direction into early July before heading down into early August.  

The Primary Roadmap calls for a lower high in early November, the Main Alternate Roadmap calls for significant new alltime highs at the end of November.    Whats great, is that the July 29 - Aug 2nd low is a major one, before a big move back up into at least early November for both scenarios.

Remember, always use stops, and don't just rely on the roadmap, look at technicals around turn dates to confirm direction.  Either way, I will be all in short come May 14 - 16, but will start building my short position May 7th.

S&P Roadmap #1 or #2?

Both S&P Roadmaps called a March 31st top well in advance along with what we are seeing, a minor pullback.  We had a higher high April 2nd, but the momentum definitely turned as confirmed by todays big drop.   So, where do we go from here?  Well, for starters, that question will become clear as time goes on, however I don't think this is the time to get greedy if you have shorts.  According to both roadmaps, we should only be down till early to mid April before rebounding, but this is where the roadmaps start to take a different direction.

The best way to play this, is take profit on your shorts.  I suspect before the week is done or early next week, we could see 1530.  At this point if we reached there, you should be out of all your shorts.

Roadmap #1 is looking at a higher high come May 14 - 16 timeframe.  Roadmap #2 by contrast would have  a significant low May 1 - 3.   I think the key is to see where the S&P is come May 1-3 timeframe to determine which roadmap is in play, but I am now thinking  based on the levels of the S&P today, that Roadmap #1 should be your guide and as such, the best strategy would be to wait until mid May to place big time shorts.

Both roadmaps can be accessed at the top via the the 2013 Roadmaps Tab.

Commodities are perilously close to breaking some critical support levels spanning a few years.  Particularly Silver which has a $26.11 support level that is critical, and I'm thinking we are looking at a bounce there which will coincide with the S&P early next week.   Notice all of a sudden Gold/Silver tracking the S&P again?

No fancy charts today, just the roadmaps.  

One more push higher into May 14-16? Why not.

Cyprus shaking the market, 2013 FULL YEAR roadmaps at a glance..

So I wanted to start of by saying that I have now posted the FULL YEAR roadmaps for the S&P 500, with all sorts of commentary attached.  You can find this by selecting the 2013 Roadmaps tab at the top of the page.

Now, Cyprus has announced some crazy plan to screw the little guy, setting an asset tax for all those with bank deposits for up to 10%.  That is crazy, and quite frankly grand larson as they attempt to raise funds that are necessary under the terms of their bailout.

Futures are down sharply tonight, however I actually believe the vote on this measure set for Monday, will actually be rejected.  That, or Europe will weigh in and say how unique Cyprus is and that this won't happen anywhere else in Europe.     In other words, I expect this to be a blip on the chart, and for the S&P to continue higher into March 31st as Roadmap #2 suggests.   I'm figuring the dip into May 3rd is roughly 3% - 5%, which is minimal given this run. THE KEY MESSAGE IS, BUY THE DIP.

Futures thanks to Cyprus:

Blow off top?

In recent posts I called short term highs (1530 SPX and 930 RUT), however the retracement didn't go back as far as I thought it would (thought 1460 SPX but 1487 was the max).  Also the Alternate Roadmap called for a Feb 25th - 28th low, and it came in on the 27th.

Now the Alternate Roadmap is looking like we are going up into March 30th, and as such ensure you use stops regardless of which side of the trade you take. I will continue to post daily resistance/support levels for the SPX.

Here is the obvious target (of course if this gets violated, we are in unchartered terrirtory):

So my idea is to just to wait it out and see if we get to 1576, try a short around there but may scale in leading to that time period if price does what I expect.   I do get the feeling though that we will retest 1492 come May 2nd before surging higher into the summer to new and unprecedented highs.  Now, that is according to roadmap #2 even and I have a major turn date of May 3rd as posted the following chart Feb 1st:

In the meantime, I will be going short again Natural Gas as I believe the downside is the most likely bet as the next move down to futures contract price of $3.15, before heading up into a June high probably around $4.

I will sometimes deviate from the plan if I see a quick trade....as always, all trades posted in real time in the Trade Section.

Good luck folks.

Short term Top is in...SPX

Next is down for the S&P, although a retest of 1530 is possible.

On Feb 8th post, the charts indicated that max pain was 1530, and we reached that and stopped at 1530.94 on Feb 19th.  My price levels appear to be accurate but time was off as I anticipated the intermediate top happening between Feb 12 - 14, and as we know it happened 5 days later.

Here is the updated S&P Chart from Feb 8th, recognizing that the pitchfork mean is being respected and not violated, it appears the continuing uptrend will only ride the line if that is indeed what Mr.Market is wanting to do and a break above this seems unlikely.   Target is 1460, however 1440 is also possible depending on the events driving the S&P down.  My thought is that since I see new highs ahead, that 1460 holds as the bottom and correlating with the bottom of the pitchfork.

As predicted on the Fib time scales, the RUT topped out at 932 (930 was predicted).  Now in considering this, I am playing with TZA but my first trade is a major loss.  I thought that it wouldn't make it past 878, and as such I stopped out rather than holding on for March 4th - 7th since I'm thinking the S&P retests 1530, thus bringing the RUT to approximately 932 again and sometime Monday or Tuesday I'll be reloaded on TZA.  What is important on the RUT is that the mid BB point is at 911.76, so I figure a retest of the upper BB which is now at 928, then breakdown and below 911.76 for a second time and confirmation that the low I am anticipating ahead materializes. 899 however must break and is a pivotal point.

Lastly, I want to show the bigger picture on the S&P.  Here is a massive rising wedge developing and maturing which is suggesting that we do have higher prices ahead and new highs, perhaps 1576 for a major double top, or at least so I think.   This could be a point where the market rockets higher into unchartered territory, but the multitude of breakdowns happening all around us, I do find this highly unlikely

S&P Open to the possibilities.....

I think at this point, you have to be open to what the market is going to give you.  Stubbornly, I held my short on the RUT using TZA without using stops and without staggering my entry points.  This has proven to be a poor decision and one I need to learn from.  At this point I feel its more risky to sell  and miss a recovery on TZA rather than to hold.

SPX
So back to the SPX.  Numerous developments have pushed the SPX higher but it really is looking exhausted and 1515 is an area that seems to have been a temporary ceiling, but today has given me the first glimpse that higher is possible and the max pain I see now would be 1530, the mean of the pitchfork (key with the SPX, is it seems reluctant to go over the mean).  I think the way to play this is with stops as it could easily ride the mean higher as time goes on, and therefore crushing shorts who don't have stops, along the way.  We do have a negative divergence in the MACD and RSI is at 66 which has room higher but given the exhausted feel of this I think upside is limited.

So if I consider the bottom of the pitchfork, I see 1450 as the likely target.   I favour a 50% fibonacci pullback so 1436 if 1530 is reached, unless the high is 1517 then the fibonacci target is 1430.

RUT

The RUT is a different beast in that it has lived above the pitchfork mean since January 2nd (as opposed to the SPX which has remained below the mean).  Given the direction I believe the SPX will take and the fact that the RUT ususally outperforms the SPX in both directions, I would suspect that the Feb 25 - Mar 5 timeframe for a low will be a more significant drop for the RUT as illustrated below:  Notice the fib timelines seem to agree with an imminent turn documented below:

-9.5% drop predicted to 830

The MACD had a negative divergence a week ago, and the KST indicator is reading again is at an extreme juncture. The next chart illustrates additional reasons why I am reluctant to sell at this point......notice the extreme KST and subsequent price action of the RUT.  If 9.5% drop in the RUT materializes, that will net me a roughly 12% gain which I will still be pleased with, even if I could have done much better.

By the way, the drop from Sept 26 to Nov 16 was 9.6%.

S&P Max pain?

On the last thread, I presented a case for the S&P which saw potential to 1515 (mean of the pitchfork) and sure enough that is where it hit (just shy).  I thought 1508 would hold as resistance but you could see another push forming when the S&P failed to close 2 consecutive closes below the trend channel.  Hardly even a dip!

So the first chart I'm going to show you is the same one I had last week since it's still in play, except the target of 1424 was based on a 1508 high.  I'm still expecting a 50% fibonacci retracement which would be approximately 1428 as a target for late Feb early Mar however this chart is important as I think you'll see how the mean is respected (unless we are breaking to new highs from here with no pullback) and this is why I'm showing it again:

The next chart shows the fibonacci support levels, and where my target is:

Now here I'm using Gann angles along with fibonacci time using 2 major lows, and what its suggesting is that my 1428 target is certainly possible in the time frame I'm looking at with absolute support at 1399.  What the chart is also telling me is that Early May is looking like a major turn date similar to June and November lows.   What I didn't illustrate in the chart, is Feb 19/20 I see 1457.

Now, after seeing this, have a look at the 2013 Alternate Roadmap which I think is now in play, and the link between the 2 charts is telling.

How are you playing the next 1, 2, and 3 weeks?

S&P Finally Ready

This past week, the tune of 85 Billion dollars fueling the markets continued driving up the S&P past the expected decline of the primary roadmap, now calling this into question.  W.D. Gann always regarded the 60 yr cycle to be the most important, and that would align to the alternate roadmap which the current market levels and recent behaviour seems to be moving towards.  Both roadmaps predict a decline into late February early March so neither is invalidated at the moment, however the alternate roadmap is predicting a 7% drop and seemingly more realistic.  Reminding that the Primary Roadmap predicts a low of March 4/5 and the Alternate Roadmap predicts a low Feb 25 - 28 (2013 RoadMaps).

Lets look at my reasons for the S&P finally being ready to start its correction.  This first one using Andrews Pitchfork shows the S&P is ready to meet the mean at approximately 1515 in the Jan 28 - 30th time frame.  I believe that 1508/09 will be the high however either way this first top is here and the reason for this is the Alternate Roadmap had the 28th the actual turn date.   According to the chart, 1440 should be the bottom of the drop meeting the bottom of the pitchfork, however I think we'll get carry through with a 50% Fibonacci level of 1424.  This is my late Feb early March target.

Next you see the trend channel that has developed and will give us some short term signals confirming when the trade is on, a TTT moment.  Shorting an upward break of 1515 might be risky, so potentially a downward break of 1502 would be safer as the trend channel would be broken and start the first wave of the decline, minor support at 1485, but likely first wave hitting 1474 which is the first major support (also noting this is the 18 MA).

The next chart shows basic fibonacci levels using the November Low and my projected high of 1508.  I'm suggesting that we will at least see 1424 which is a 50% retracement and where I will start my first long position.  The ultimate would be 1405 (61.8% retracement) and where my final long batch would be bought.

I'm also noting that some blogs I've read had January 30th using elliot wave analysis at approximately 1503.

Lastly worth noting:

S&P
RSI is at 75, KST is at 40.4 and about to negatively diverge.

RUT
RUT is overbought for the longest period as far as I can see spanning many years by some margin with RSI at 77 and KST has just had a negative divergence. 

TRAN
TRAN is at parabolic overbought levels with RSI at 85 and KST at 87!!!

Reminding I will update my trades in real time in the Trade History section.  Currently trading TZA as I think the drop in the RUT will be larger on a percentage basis during the same time period.

Charts that make you go hmmmm...

The roadmap is calling for the trend to change down into the March 4th/5th however although this map has proven reliable, this can change and if so then the 2013 roadmap must be questioned.  The end of 2011 into 2012 had a similar divergence so I'm not that worried at the current time, but we still need to watch support and resistance levels along with some other indications.

So with that said, my thoughts haven't changed much since my previous post, this market is about to correct downward in a big way.  Lets see what the following charts are showing us:

S&P

I'm not so sure that this S&P chart is very conclusive.  Yes, its close to over bought and yes the KST is also at an extreme level so we know that a change will happen from levels not far from here, but we also know that it can hang around here for a while.  Why do I think this will change soon?  Well, the 2013 roadmap of course

In the bigger picture, you can see what is setting up for after the June high indicated on the 2013 roadmap which appears to be a rather lethal looking rising wedge which I think will resolve to the downside.  Again, time is getting close.

If Friday was the high, then we are looking at some basic fibonacci retracements/support levels at 1453 as a first support and 1432 as the next major support.  These are using the November low, and once we reach the projected June high, we'll look at fib levels from the 2012 low in June.

Now lets take a look at the RUT and TRANS for possible direction

RUT

The situation with the RUT is telling, the KST indicator over the last several months has been quite decisive when it turns, and its looking like that's happening (again at extreme levels, so not surprising).  RSI is at extreme levels also and I think that this rally is already long in the tooth.  This seems to me that it will lead the S&P into its next move down into March.

In looking at fib levels, assuming a top on Friday, 862 then 843 look likely targets, but for a March low I'm thinking roughly 813 now.

TRANS

Given the levels of extremes here, the TRANS is the biggest indicator that this overheated market will have a solid correction. RSI way overbought, KST into major extremes, and combined with everything else discussed above, you have a TTT moment (although I was early with my TZA buy).

S&P ready for a correction....

So now that everyone has seen the roadmap, I'm going to focus on the next direction into March 4/5 time frame which I believe is down.   There are a number of signs that are pointing to this, here are my main reasons:

The Nikkei I think is going to plunge and the world markets I think will follow however using other reasons to do it (think debt ceiling).  RSI way overbought for the last 2 months!  You can see the support levels I suspect S1 is the target next -11.4%.  KST is a very reliable indicator which also is reading at extreme levels, and suggesting a solid corrections is next.   There is more, but you get the picture, these extreme readings are eerily similar to March 2012, and from there the Nikkei dropped 19%.

Take a look at this chart:

Nikkei

Now, lets see some more charts:

RUT

TRAN

So, these are the main reasons which give me confidence that the current time would make a good short as we are in overheated markets.....will it lead to a trend change?  Time will tell.  In the correlation chart I'm most confident in, I think we are down into March 4/5th and these charts, are giving me confidence that this is a safe place to short.

I am positioned as indicated in the trade history section which I will post in real time, however want to issue a word of caution.  Do NOT use UVXY as a means to short the market.  You will lose your shirt.  I like TZA at the moment as the last 2 candles have formed a Bullish Harami which is hopefully confirmed tomorrow.

Icing on the cake?

http://www.aaii.com/sentimentsurvey/sent_results

S&P 2013 Roadmap - Until mid June

Firstly, welcome to my blog and my first attempt of a blog of any kind.  I'll cut right to the chase. Important to note that my charts and forecasts are always focused on time rather than price.

I am posting my 2013 Roadmap which takes us to mid June and have chosen not to extend this roadmap because I want to ensure the correlation chart I am using doesn't go off track, making a longer term chart useless if it does.  You'll notice some high and low dates on the chart which I estimate the market will mimic   At the moment, my January 14th top prediction I've been posting on cyclicalmarketanalysis.blogspot.com since mid to late December looks awfully strong noting some of the TA indicators that I like to use when deciding how likely the roadmap is going to be correct are suggesting a turn is imminent.

I will not try to trade the day to day wiggles, but will look at trend and may trade with the trend if I see an overbought situation on the 2 hour chart.   Right now the RUT is in overbought territory with an RSI of 72.63 (has been overbought since Jan 2nd) and its an index that likes to lead the overall market.  KST is another indicator that is also lined up to make a negative divergence at a very extreme reading.  Last but not least the MACD histogram has been over zero for almost 2 months, and that is a good sign that a reversal is imminent.

I am positioned as indicated in the Trade History section which I will update in real time for those who wish to see it, and of course I expect to be judged against my performance since I'm putting it out there publicly.