Monday, May 23, 2011

5/23 Daily Commentary

Currently hold 2% SDS, 1% UCPIX, 1% SOPIX.
The solar/lunar component of I1 has had an 8-day lead since the Japan quake in mid-March.  This cycle appears to have broken the lead and returned the series to synchronicity.  It topped with the market earlier this month, declined into it's trough, and will advance past +2 tomorrow.  This is a buy signal, so if the market starts a one-week rally overnight/tomorrow then the lead has disappeared from the series.  This will make my forecasting job easier for the short-term moves in the future.

I posted this morning that DJ futures would remain normal if they did not decline below 12,312.  Their low was 12,311, so this M/A envelope held and, given the I1 component and precious metals ready to rally, should provide an opportunity to short for a 2-month move into August.  Today's decline overlapped the prior high in April, so I know we are not in a 5 up to new highs. 

The checklist for the current market status is as follows:
1)  DJ critical M/A is on sell.  Currently 12,490 overhead resistance.
2)  SP futures 30-minute M/A is on sell. Currently 1325.75 overhead resistance.
3)  I1 30-day is on sell
4)  Cycles are on sell

The bullish forces for the stock market are:
1)  Short-term oversold
2)  DJ daily M/A
3)  I1 component bottomed today
DJI cash 50-day chart:

I'm not in a rush to load up on shorts because bull markets die hard.  I want a last-gasp rally off of support. 
Over the weekend I updated the Longer Signals using Time Elevations with an averaged version of this series.  The raw version flashes sell next Wednesday while the averaged version is on a sell currently.

Silver cycle chart:
Here is the gold cycle chart:

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