The monthly chart shows price in February having
made a lower high, lower low and slightly lower close versus January, closing
below the monthly and yearly pivots and the MM and MY MAs. Price early in March
has thus far opened above its monthly pivot and made a higher high, and is currently
trading above the MM MA and testing the MY MA.
While last month's action was most definitely
behavior indicative of price being on the downside of the multi-year cycle, this
month's early action hints that price may be on the upside of the MY cycle. It
is crucial to remember that in a downtrend strength is usually seen early in the
bar/candle, so it is far more important where the month closes than the route it
took to get there. Nevertheless, with the possibility that we were overdue to
see a multi-year low, we must be open to the possibility that last month's
double-bottom (or triple-bottom) was the MY low. If so, there will be no excuse
for price not to make fresh all-time highs in the months ahead. If August was a
MY low and we are on the downside of a fresh MY cycle whose low is not due until
the end of the year, there is no excuse for price to not take out the August
lows in the next couple of months. Either way, a large, decisive move should
occur before mid-year that will set the stage for follow-through in the same
direction for the remainder of the 2016.
The weekly chart shows price last week with a
strong bullish candle, making a higher low, high and close versus the prior
week. Price closed above the MW and MM MAs as price continued the surge out of
the mid-February multi-month low. Whether we are overdue to see a MM high or
one is not projected until 3/25 (depending on whether the December/January hitch
marked with ?s constituted an intervening MM cycle) is fairly irrelevant now, as
price is testing the MY MA, the last higher timeframe resistance area. If price
is on the downside of the MY cycle, the MY MA could easily provide resistance to
see an early (or overdue) MM high.
Unless price really surprises by attaining new
highs before finding its MM high, the real intrigue will occur as price searches
for its next MM low. When price trades below its weekly pivot and then below
the MW MA and turns that average lower, we will know that the MM high has been
seen. Bulls will then want to see the monthly pivot or MM MA provide support
for the MM low projected for the week of 5/6; a higher MM low on monthly pivot/MM MA support would confirm that price is on the upside of the multi-year
cycle. Bears would expect to see price drop precipitously out of the MM high,
with price seeing new lows in the weeks ahead.
The daily chart shows price last week surging out
of a Tuesday intraday low and making a Friday high, classic early weakness/late
strength behavior in an uptrend (and the bullish corollary to the behavior
mentioned in the monthly chart commentary). Price closed above the weekly and
monthly pivots and the MD, MW and MM MAs as we continued on the upside of the
multi-week cycle.
We are either overdue for a MW high or one is not
projected until next Tuesday, depending upon whether or not an intervening MW
cycle was seen 2/22-2/24. Price today has opened below its daily pivot, a hint
that price may be on the downside of the multi-day cycle. It was mentioned last
week that if we are overdue for the MW high, the next MD high will likely also
be the MW high. If so, price will fail to find support at the MD MA and will
trade below it, turning that average downward. Even if we are on the upside of
a fresh MW cycle, if the MY MA can provide resistance for price to see a MM high
(as discussed in the weekly chart commentary), it can certainly provide
resistance for price to see a half-span shift of the MW high, which would match
up with last Friday.
All of the charts have a level of indecision about
where they are in their respective cycles, something I have not seen in the
several years of following this theory of market behavior. There is little
point to placing odds that price is on the upside or downside of any particular
cycle, as price is quite capable of defying the highest odds. While the
uncertainty presents problems for long-term investors, swing traders can still
gain some benefit. With the possibility that we are overdue for a MW high,
could see a half-span MW high, or the MW high will not be seen until next
Tuesday, it is still evident that the downside risk over the next 1-3 weeks is
greater than the upside reward. One may want to wait for a close below the MD
MA to exit longs (and/or go short), but the next "easy" money should be made to
the downside as price tests the MW MA or perhaps even the MM MA/monthly pivot.
The hourly chart quickly became a confusing mess on
Friday as price near the open appeared to make a 24Hr high followed by a 24Hr
low on daily pivot support. Price did follow through to new highs several hours
later but then sold off again. Price traded mostly sideways overnight under
24Hr MA and daily pivot resistance, indicating that Friday's high was also a MD
high. It is unclear whether we are overdue to see a 24Hr low or if an
intervening daily cycle was seen in Sunday evening trading. What is clear is
that price is on the downside of the MD cycle, and we should expect price to
visit the weekly pivot/MD MA confluence area near 1973 before the MD low is
seen. If Friday was also a MW high, price could test the green MW MA later this
week.
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