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business newsThe Message of the Quarterly Swing Chart
By
Jeffrey Cooper
Feb 01, 2012 9:40 am
We are now in the first week of February and there are many major cycles that are culminating.
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You give me my profits when you get there
--"Respect" (Aretha Franklin)
Another day, another gap of no account.
The week started with a large downside gap which simply led to a first hour low followed by a grinding move up to Gap Window to backtest a broken trendline.
On Tuesday, we got a mirror image with an upside gap that led to a first-hour high.
Despite recapturing the important short-term trendline that coincides with the key 1311 level on the opening gap, the index snapped the gap, remaining below it all day yesterday.
However, the SPY did eke out a rebound into the bell that once again held 1311 on the close. To recap, 1311 is key because it is opposite and vibrates off October 4, last year's low.
This morning we get another gap, which is testing the 132 reference point from the last two days. Above that, one more run to133 should play out.
We are now in the first week of February and there are many major cycles that culminate here. Clearly the market is running up into this potential turning point which suggests a high, not a low.
If the market reacts, the character of any correction will tell us much about the nature of the cycles exerting their influence.
Click to enlarge
As you know, February 3 ties to 1333 on The Wheel with February 3 being 1576 days from the October 9, 2007 all time 1576 high. That high was a pattern high with a first, primary peak in July 2007 and a secondary test 90 days/degrees later in October 2011.
Recently, we had a peak in late October followed by a high 90 days later on January 26.
That January 26 high left a Topping Tail and Train Tracks. So that is a potentially important signal bar. Offsetting the January 26th 1333 high with authority suggests a run to 1370 and likely a new swing high toward 1400.
In addition to the numerous cycles hitting in early February, March is also the 144th Fib month from the March 2000 Bubble Top in the S&P 500 (^GSPC) and Nasdaq (^IXIC) while January was the 144th month from the Dow Jones Industrial (^DJI) top in January 2000 peak. So the first quarter is replete with major turning points.
Recently we referred to The Ides of March.
March is also 36 months or 6 squared months from the major March ’09 low.
This is interesting as the big July 2010 low was 4 squared months from March ’09 and the end of April high in 2011 was 5 squared months from March ’09.
The monthly charts are still bullish with October being the best October in 20 years and January being the best January in around 15 years, believe it or not.
Since October’s large range outside up month, the S&P has traced out two “up inside” months. The normal expectation of two up inside months is for a turndown in the monthlies. However, when the market does something different and the double up inside pattern is broken to the upside, it indicates an extension which is what has played out since the S&P eclipsed December’s highs.
Will the market respect the cycle turning points in the first week in February or will it be magnetized to a new swing high above 1370 into the 12th squared month from March 2000 and the 6th squared month from March 2009? Could the market pull back here first and run up into March?
It looks like the action at 1333 (2 X the low), will be the key that tells the tale.
If the market just extends right from here, a 55-day panic count from the last swing low on December 19 ties to around February 12.
Few market participants ever look at a Quarterly Swing Chart. Let’s walk through the picture of the quarterly chart.
Note there are two QUARTERLY Plus One/Minus Two buy setups. One occurred in the summer of 2010 and one in the summer of 2011.
They were set up by two consecutive lower quarterly lows while the 3 month quarterly chart was still pointing up.
The Quarterly Swing Chart turned back up on trade over last year’s fourth quarter high which was the late October high at 1292.
This is the critical level I’ve been thinking would be tested on an A B C pullback, but today’s gap up puts that notion in jeopardy.
Flipping back below the quarterly turnup pivot at 1292 with authority could be the sign of the bear, but certainly should lead to a substantial correction down to around 1260 as noted yesterday.
The message carried by the Quarterly Chart is significant. Note the ‘closing only’ trendline drawn from the quarterly closing high in 2007 has been exceeded---SO FAR--- the quarter is long from over. The picture again suggests that March and the close for the first quarter of 2012 will be critical for the position of the market.
Note the closes on this trendline which were well respected 3 and 4 quarters ago which led to the big reaction 3rd quarter of 2011.
Did that decline simply pull the rubber band back for a successful attack of this trendline or is the market carving out a bearish backtest of this long respected trendline?
Again, this quarter’s close should prove pivotal. The problem is we have to drill down in time to get a handle on the direction as the market could blow off to a new swing nominal high above 1370 to 1400 or could fail below 1258 before March is over.
Interestingly, March 21st or what Gann considered ‘zero’ on the year, the true beginning of the year with the Spring Equinox squares last year's 1075 low.
Once again, implying this March, like so many March’s in the last 12 years will be pivotal.
Get Jeff's commentary plus day & swing trading ideas each day with a FREE 14 day trial to Jeff Cooper's Daily Market Report.
You give me my profits when you get there
--"Respect" (Aretha Franklin)
Another day, another gap of no account.
The week started with a large downside gap which simply led to a first hour low followed by a grinding move up to Gap Window to backtest a broken trendline.
On Tuesday, we got a mirror image with an upside gap that led to a first-hour high.
Despite recapturing the important short-term trendline that coincides with the key 1311 level on the opening gap, the index snapped the gap, remaining below it all day yesterday.
However, the SPY did eke out a rebound into the bell that once again held 1311 on the close. To recap, 1311 is key because it is opposite and vibrates off October 4, last year's low.
This morning we get another gap, which is testing the 132 reference point from the last two days. Above that, one more run to133 should play out.
We are now in the first week of February and there are many major cycles that culminate here. Clearly the market is running up into this potential turning point which suggests a high, not a low.
If the market reacts, the character of any correction will tell us much about the nature of the cycles exerting their influence.
Click to enlarge
As you know, February 3 ties to 1333 on The Wheel with February 3 being 1576 days from the October 9, 2007 all time 1576 high. That high was a pattern high with a first, primary peak in July 2007 and a secondary test 90 days/degrees later in October 2011.
Recently, we had a peak in late October followed by a high 90 days later on January 26.
That January 26 high left a Topping Tail and Train Tracks. So that is a potentially important signal bar. Offsetting the January 26th 1333 high with authority suggests a run to 1370 and likely a new swing high toward 1400.
In addition to the numerous cycles hitting in early February, March is also the 144th Fib month from the March 2000 Bubble Top in the S&P 500 (^GSPC) and Nasdaq (^IXIC) while January was the 144th month from the Dow Jones Industrial (^DJI) top in January 2000 peak. So the first quarter is replete with major turning points.Recently we referred to The Ides of March.
March is also 36 months or 6 squared months from the major March ’09 low.
This is interesting as the big July 2010 low was 4 squared months from March ’09 and the end of April high in 2011 was 5 squared months from March ’09.
The monthly charts are still bullish with October being the best October in 20 years and January being the best January in around 15 years, believe it or not.
Since October’s large range outside up month, the S&P has traced out two “up inside” months. The normal expectation of two up inside months is for a turndown in the monthlies. However, when the market does something different and the double up inside pattern is broken to the upside, it indicates an extension which is what has played out since the S&P eclipsed December’s highs.
Will the market respect the cycle turning points in the first week in February or will it be magnetized to a new swing high above 1370 into the 12th squared month from March 2000 and the 6th squared month from March 2009? Could the market pull back here first and run up into March?
It looks like the action at 1333 (2 X the low), will be the key that tells the tale.
If the market just extends right from here, a 55-day panic count from the last swing low on December 19 ties to around February 12.
Few market participants ever look at a Quarterly Swing Chart. Let’s walk through the picture of the quarterly chart.
Note there are two QUARTERLY Plus One/Minus Two buy setups. One occurred in the summer of 2010 and one in the summer of 2011.
They were set up by two consecutive lower quarterly lows while the 3 month quarterly chart was still pointing up.
The Quarterly Swing Chart turned back up on trade over last year’s fourth quarter high which was the late October high at 1292.
This is the critical level I’ve been thinking would be tested on an A B C pullback, but today’s gap up puts that notion in jeopardy.
Flipping back below the quarterly turnup pivot at 1292 with authority could be the sign of the bear, but certainly should lead to a substantial correction down to around 1260 as noted yesterday.
The message carried by the Quarterly Chart is significant. Note the ‘closing only’ trendline drawn from the quarterly closing high in 2007 has been exceeded---SO FAR--- the quarter is long from over. The picture again suggests that March and the close for the first quarter of 2012 will be critical for the position of the market.Note the closes on this trendline which were well respected 3 and 4 quarters ago which led to the big reaction 3rd quarter of 2011.
Did that decline simply pull the rubber band back for a successful attack of this trendline or is the market carving out a bearish backtest of this long respected trendline?
Again, this quarter’s close should prove pivotal. The problem is we have to drill down in time to get a handle on the direction as the market could blow off to a new swing nominal high above 1370 to 1400 or could fail below 1258 before March is over.
Interestingly, March 21st or what Gann considered ‘zero’ on the year, the true beginning of the year with the Spring Equinox squares last year's 1075 low.
Once again, implying this March, like so many March’s in the last 12 years will be pivotal.
Get Jeff's commentary plus day & swing trading ideas each day with a FREE 14 day trial to Jeff Cooper's Daily Market Report.
No positions in stocks mentioned.
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