Friday 1/29/16

Despite fairly large swings during the day, price yesterday still managed to make a lower high and higher low and closed little-changed versus Wednesday.  Price continues to find support on the MD MA as we continue on the upside of the MD MA, but price seems reluctant to make any upside progress.

As mentioned the last few days, we are overdue to see a MW high, but if we had experienced an inversion of the MW low, we could expect another couple of days of upside before the MW high is seen (roughly a half-span extension).   I had expected price to rally up to the MW MA before the MW high was seen, but instead price has moved mostly sideways while the MW MA has raced down to meet price.

If the MW MA provides resistance to price for its MW high, it would be an indication that price is on the downside of the multi-month cycle.   If this is the case, I would expect the recent MW low to be taken out during the downleg of the next MW cycle.   It should be noted that crude oil, which has had a high correlation with the equity markets of late, has eclipsed its MW MA the last several days; though running out of time before the downleg of the next MW cycle, there is still hope that the S&P can break through MW MA resistance. This would in turn give hope that last week's low was also a MM low.

The hourly chart shows price yesterday whipsawing around the daily pivot throughout the day, making a 24Hr high shortly after the NY open and making its 24Hr low just one bar later. The lower 24Hr high and higher 24Hr low confirmed Wednesday's 24Hr high and low as a MD high and MD low.  With price now on the upside of the MD cycle and late in the timing window to see a MW high, bulls need a strong move up during this current MD cycle.

It appears that price saw an early 24Hr high in overnight trading, and price has recently tested the 24Hr MA. On the upside of the MD cycle, it is quite possible that the 24Hr MA has provided support for an early 24Hr low.  If so, price should be free to stage a strong rally today on the upside of the daily, MD, and MW cycles.