Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Coming in October: Next Major Price Cycle Low


A major price cycle on the daily S&P 500 chart, which shows reliability in bottoming about every 15.5 months, is due for its next low on or about October 31.

Michael Paulenoff is the author of MPTrader ETF & Stock Trading Diary.

A major price cycle on the daily S&P 500 chart, which shows reliability in bottoming about every 15.5 months, is due for its next low on or about October 31. The cycle appears to have been influencing prices since the 2002-03 lows.

The suggestion that such a major cycle is due to bottom next in the second half of October sends shivers down the spine of the most ardent market optimist.

The cycle is now 84% complete, which means that it is very mature and is in its "down-hard" position entering into its final phase prior to bottoming. Notwithstanding the recent vertical recovery rally from 1101.54 to today's high at 1204.49, or +9.4% in just five sessions, the strength comes within the most negative portion of the overarching cycle, but is way too early to be considered a significant cycle low.

No, the much more likely scenario suggests that the August 9 low is the first of at least two, and perhaps several, declines to lower-lows into the anticipated October bottom.

Finally, let's notice that this impending cycle low has emerged from weakness off of an eight- to nine-month topping formation. The last time the 15.5 month cycle bottom occurred in the aftermath of a multi-month topping formation was the SPX breakdown in September 2008 off of a major distribution pattern that started in January 2008.

This year's cyclic pattern is very similar, although not quite as potentially negative.

Twitter: @mptrader

< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos