Thursday 8/21/2015

The daily chart shows price yesterday making a lower high, lower low and lower close versus Tuesday's candle with price finding soft support at the lower triangle boundary. Price today has opened below the daily pivot and has thus far made a lower low.

With the movement of the past two days, it is apparent that price is on the downside of the multi-day cycle. It is still unclear, however, where we are in the multi-week cycle; until price takes out the early July low or the mid-July high, it seems likely this uncertainty will persist. A MW high is projected for Monday, but it is possible that high was seen on Tuesday.   If so, this would normally mean that we have another two weeks of decline ahead of us before the projected MW low is found, but the cycles have been behaving anything but normally lately.

Stock prices should drop dramatically over the next two weeks if we are on the downside of the MM and MW cycles, so this is a high risk time for the market. Failure to do so would indicate an underlying strength that could propel the market much higher once these cycles turn up. As mentioned in Monday's blog, there is no need to be a hero while the market sorts this out;  the ensuing move in either direction will be large enough to participate after the direction is decided.

The hourly chart shows price making its 24Hr low at noon yesterday before a sharp Fed comments-induced rally that marked an early 24Hr high. Prices quickly gave up all of those gains and drifted sideways until an overnight sell-off which has taken out yesterday's low.

Price is currently searching for a Session high. A Session low and 24Hr low are projected for noon.  We are overdue for a multi-day low as well, and it is likely the next 24Hr low will also mark the MD low.  Should the next Session low be higher than the overnight low, it would mean the 24Hr low was already seen and I would expect price to rise through the rest of the day. Whether price will be able to reach the MD MA/MW MA confluence area near 2084 today is questionable, but I would expect that area to be tested in the next few trading days, unless the MD cycle gets muted by the downward force of the MW and MM cycles.