| 20th August 2001 - S+P 500 Forecast - Final Entry |
| The S+P 500 has been in a consistent downtrend
since 22nd May 2001. It has broken through both the 50% support level
at 1199 and the 61.8% level at 1171. Considering previous time frames
the next expected change of trend is on 10th September 2001. |
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Week Ending 14th September 2001
US markets have not traded since the appalling events of Tuesday morning.
As of writing, expectations are for the US equities Markets at the NYSE
and NASDAQ are to resume trading on Monday morning 17th Sept, however activity
on the AMEX is still in doubt.
Below is the chart outlining the simple methodology used to arrive at the
Sept 10th COT date. As can be seen, a series of overlapping timeframes all
point to the same date. What made this particular date interesting was the
Contiguous time frame of 111 days. Personally I consider this to be the
weakest of all signals as its success rate is very low. It was included
primarily because it was supported by the two other noncontiguous time frames
of 172 days and the strongest one of 263 days. As indicated last week, price
was expected to hover around the 1076 mark. Monday's low was 1073.
Tuesday's events have overtaken all market sentiment so as a COT date this
one can be considered not to have worked. With markets expected to resume,
the question is : What will happen ? Exchange officials are reported to
have relaxed some rules to allow and panic selling to be shored up early,
so I expect a scenario as follows:
An early wave of selling is expected with the 'If in Doubt - Get Out' mantra
being at the head of the queue. If the major players do their job ( as reported
) then this initial wave will be halted early and supposedly very quickly.
If the initial push down is large, then a swift retracement back to near
opening levels can be expected.
Note. This is where a secondary selling wave would be expected to
appear. If this occurs, then the market should be watched closely to see
if new lows are formed. If a higher low is made during the day, then expectations
would be strong for a swing up from this point, however its duration would
be dictated by the major political events as they are unfolding. If a lower
low is formed by the secondary selling wave then things are certainly in
trouble. I am inclined at this point to expect the former over the latter.
Analysts should note that all world markets will be in lockstep with the
New York heart beat, and this heart beat will be driven by a Political rhythm
for the foreseeable future. This means that Political news, will be the
driver of the system, and all other world markets will fall in behind the
US lead. |
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Week Ending 7th September 2001
The week started with a bull trap for young users. (2)
Opening low, rising quickly to the important 50% retracement level
during the day but finishing near the Open. Its an UP day on the chart but
technically extremely weak. The rest of the week was a simple imitation
of the previous week with the strong downward trend taking precedence. With
the COT date expected on Monday, the strong trending movement is a good
indicator for it to be successful. The market finished just off its lows
for the day after touching the previous low (3)
1081 on 22 March 2001. This is a technically major support level and should
provide short to medium term resistance to further lows. Any solid penetration
of this level would be certainly be a very negative indicator. Another strong
point of resistance (1) is the 100%
of the Range (1316-1166) apply to the 2nd Aug High of 1226. This gives a
support of 1076 which is close to the previous low of 1081. As indicated
on the Chart, the parallel downwards channel was breached on Friday and
is no longer in play. We now wait for Monday for an indicator for a change
in trend..... See
Picture
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Week Ending 31st August 2001
Last weeks strong finish, fizzled early this week and acted as a precursor
for this weeks main event ; DOWN.
Mondays High came very close to the 90 deg Growth level in the Square of
9, with the Market making it to 1187 before retreating heavily. New lows
for this cycle also confirmed last weeks statement regarding the Trend Line
indicator ( Swing Chart ) pointing to lower prices. With the previous 3
swings down being 60, 57 and 45 and this swing currently at 62 points, some
short term consolidation could be expected before resuming. With this week
being strongly trending, it would be expected that this should continue
as we approach the COT date in the following week. It should be remembered
that strong, or even violent action leading to a forecasted COT date is
always a strong indicator that the forecast COT date will work. As always
market action will provide the guide..... See
Picture
|
Week Ending 24th Aug 2001
The Downtrend is continuing with action still within the Broad channel of
the Parallel lines. The sharp close on the upside should be considered,
however the Trend is still down. Alter your Chart to Gann Swing Style and
it is clear that there are consistent lower highs and lower lows: Gann's
definition of a Downward trend. Should the upside be sustained then a higher
swing high and a higher swing low would be required to 'swing' the trend
line indicator up. Should the market continue up next week then basic analysis
would have the market retreating shortly after touching the upper end of
the channel. Referring to this weeks graphic we can see that all previous
levels of support have been breached leaving the 4th April 2001 Low of 1092
as the next level of support. As can be seen, this level intersects the
lower line of the Channel on or around the 10th of Sept 2001, the Designated
COT date.... See
Picture |
