I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Friday, March 16, 2012

Mar 16

Very tough week last week. We had a very solid statistical setup with quite favorable odds: Mar 6 - Daily and 60-min Cycles, Looking for an Edge. Instead of a divergence bottom after a 60-min cycle top signal (which happens 91% of the time ... well now only 90% of the time with last weeks failure) we got a spike bottom on the first pullback and a *major* bull move that was so fast my system really had no time to respond to it.

Not complaining, it's just what happens. That's why every stat is not 100%, because there are exceptions to every setup. So currently I am waiting for something tradeable to emerge again.

The market made a 60-min bottom cycle signal last week, which means that the cycle from Dec is complete. It made an extremely right translated cycle. And I looked back through my system to see other times where it has made cycles like this, and the company it keeps is quite interesting: 2003, 2004, late 2006/early 2007, and 2010. Basically these are happening in the the middle of larger bull moves. Not at the end of them.

Another interesting thing that came out of this is that my main indicator on my Daily chart is still making new highs right along side price. Which means that I would like to reiterate the point I made in this post: Why I am not looking for 'the top' with the next pullback, whenever it happens. I don't think the next pullback which will cause my main Daily Indicator to peak will be 'the top'.

Whereas this last pullback was too shallow and way too fast to be the dip that I was looking to buy. I still do think both my 60-min and Daily Cycle systems are telling me that we will get a legitimate dip-buying opportunity and that this cyclical bull market is not yet done.

In the meantime, I am continuing to watch setups.
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