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24th May 2002 - Outlook for S&P 500 (See
Chart Provided)
The following is based upon analysis of the S&P 500 index. Due
to the nature of markets, there are numerous similarities with the
DJIA and as such there is no point in duplicating this information
and I would encourage readers to look at the other markets and derive
their own forecasts on these assumptions.
Long Term Perspective.
When looking at the market from a distance Gann said that we should
look at the 30, 20, 15, 10 7, and 5 year cycles. Also of importance
is the 180 week cycle.
We are approaching the end of the 15 year (180 months) cycle from
the 1987 high which occurred on 25th Aug 1987. The second (lower)
high before the crash occurred on 2nd Oct 1987. Information not
canvassed here is the Nov Low, although it too should be taken into
account.
Looking backwards from August/Oct 2002
The 5 year cycle lining up with Oct Highs in 1997.
The 7 year cycle gives us nothing
The 10 year cycle has a very weak alliance with the Oct 5th 1992
low.
The 15 year cycle lining up with the Aug 1987 high.
The 20 year cycle lines up with the Major low in Aug 1982
and the 30 year cycle has a weak alliance with the insignificant
1972 Aug High and Oct low
Short Term Perspective
Fibonacci Time Zones :
610 days from the Jan 31 2001 High :- 3rd Oct 2002
377 Days from the Sept 21 2001 low : 3rd Oct 2002
233 Days from the 7th Jan 2002 High :- 28th Aug 2002
Time Space Division
24th Mar 2000 - 21st Sept 2001 * 61.8% gives :- 24th Aug 2002
Time Ranges
The most prominent are on the Chart supplied (See
Chart)
Squares
The S&P has been in a 153/4 cycle since Mar 2000 (courtesy
Bill McLaren)
Placing a Gann Square grid of 153.5 on the Chart, terminating Cycles
are visible from the following points:
From 22nd May 2001 forward - 3 Squares terminate 27th Aug 2002
From 31st Jan 2001 forward - 4 Squares terminate 8th Oct 2002
From 21st Dec 2000 forward - 4 Squares terminate 27th Aug 2002
From 1st Sept 2000 forward - 5 Squares terminate 9th Oct 2002
From 17th July 2000 forward - 5 Squares terminate 24th Aug 2002
From 24th Mar 2000 forward - 6 Squares terminate 1st Oct 2002
Other Dates to watch :
21st Sept (360 solar deg from Sept 2001 low)
8th July ( 180 solar degrees from 7th Jan 2002 high )
As can be seen from the above analysis, there is expectation of
possible COT around the last week in August and the first 2 weeks
in October. Historically, these periods have produced some strong
events.
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Summary for Week Ending 27th July 2002
A continuation of the drama this week with impressive declines across
all three markets. The DOW managed to push through the Sept 2001 low of
7927 and the obvious threat was convincing enough to send the market into
some very wild behavior. Most notably was the action on Wednesday which
saw an Outside day form with a daily range of an amazing 754 points, which
at this level is a 10% range day. Certainly not something you will see
very often.
The S&P 500, which we have been following closely, is the index which
appears to be leading at present, and as outlined in the previous reports
target level was the 50% level of the range square off the Mar 2000 high.
This level, 776 was touched on Wednesday (775), and the market made a
miraculous recovery taking off like a bandit, rising 9% for the day.
As mentioned last week, the action in the NASDAQ has been of a lesser
importance as the market has already been hammered. When looking at the
declines in the S&P and the DOW, the angles of the declines are far more
vicious than with the NASDAQ and as such do not see very much importance
to be applied to this index. As said earlier, the S&P appears to be leading
and close attention to technical levels here will give good indications
to behavior in the other Indices.
A quick note about Volume. We look to this as a possible indicator of
an imminent termination of a trend. Coupling this with other indicators,
it can be a useful although not always reliable tool. Looking at Volumes
for the previous Friday and for Mon - Thur this week we saw daily volumes
jump by about 50% and peak on Wednesday. On its own it looks as though
the current excitement may be over- for a while.
I noted last week that I was awaiting the 25th as a possible COT. It came
in on the 24th but I can live with being a day out. The 50% level touched
on Wed was a very good technical indicator and we await the coming week
to see if it holds.
Again the Question - Is It Over ?. From a technical perspective I would
say it is, and would be looking at call options over any stocks that have
been severely hit over the past 2 weeks. For obvious reasons I would be
keeping my stops very tight. While the market is like this, volatility
is at a premium and it will be represented in the Price you pay for your
Options so any Option trade would be for a Good time not a long time.
Swing Charts
DJIA, S&P500, NASDAQ
Just like last week and the week before that etc etc...
All swing Patters are Down but a change in pattern is due this week
!
Charts
DJIA
Having broken the long term support lines, the market is in blue sky
territory. Support is now centered around previous Highs and lows as well
as standard technical support levels. This weeks chart is a weekly, highlighting
how close the market is to the 37.5% (Gann) and the 38.2% (Fibonacci)
levels. Curiously, these also line up with the Sept 98 support levels.
Any retracement upwards from the current lows should be watched as it
approaches the standard technical levels.
S&P This weeks chart is again the weekly chart showing the 153/4
day Square grid and also the Price Square highlighting the 50% level which
caused so much excitement on Wednesday. Should this level hold, then we
can expect a breaking of the current swing pattern by a Higher High, Higher
Low pattern to come in this week. Should we get a run up, then the obvious
price target is the 1170 level. Revisiting last weeks chart, this is a
possible longer term view. Don't expect it to fall to 400 anytime soon.
NASDAQ
This weeks chart is Daily, showing the Price square highlighting the current
levels hovering around the 75% levels. Also of note with this chart is
the fact that the decline in the NASDAQ has been orderly since the Jan
high. This is in opposition to the inverse parabolic shape of the declines
in the DOW and the S&P, hence, activity in this market will be dull at
best.
DJIA See
Chart
S&P 500 See
Chart
NASDAQ See
Chart
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