Market Turns Advisory - Short-Term Outlook, May 28, 08

Market Turns Advisory - Short-Term Outlook, May 28, 2008

By Jim Curry

S&P 500 CASH
SPX CASH: Daily Projected Support and Resistance levels: High - 1394; low - 1379
JUNE SP: Daily Projected Support and Resistance levels: High - 1395; low - 1380
SPX CASH: 5-Day Projected Support and Resistance levels: High - 1408; low - 1342 JUNE SP: 5-Day Projected Support and Resistance levels: High - 1409; Low - 1343
SPX CASH: Monthly Projected Support and Resistance levels: High - 1435; Low - 1355

Current analysis: The SPX started out Tuesday’s session in rally mode - initially forming the more bearish pattern of an early-day high into resistance, here running right up to daily projected resistance (1384-1386) in hitting 1383.99 on a first-hour time peak. From there, lower prices were seen into the afternoon, with the SPX trading all the way down to a low of 1373.07 - before then rallying off the same into late-day - here managing to take out the highs for the day with the tag of 1387.50. By the closing bell, volume had come in at about even with Friday’s figures - which would not rule some test of today’s lows. For the best technical 'look' I would have rather seen a
contraction in volume at Tuesday's close.

As for the cycles, the 10 day cycle has now moved back to a bullish position with Tuesday‘s action. The larger 20-day cycle is now seen as 11 days along and is still labeled as neutral, while the 45-day component is seen as 49 days along and is currently still labeled as bearish - though with some potential that this cycle has seen it‘s bottom. The 120-day cycle is now seen as 86 days along and is still regarded as neutral, while the 360-day (9-month) cycle component is seen as 49 days along and is still labeled as bullish into later this year or into the Spring of 2009.

From the minor cycles, a short-term peak was projected to occur near May 19th - which was confirmed and was then favored to be followed by a correction lower into approximately May 26th, plus or minus a day. Thus, with Tuesday’s break to new swing lows for the move, that action has been satisfied. And, with the hourly close above trendline resistance (chart, below), the probabilities now favor that our minor cycle bottom is in place - and that a rally into the June 2-3rd minor cycle top is in progress. In terms of price, the 9-day moving average or higher should act as the first upside magnet to price; however, a test of the current weekly projected resistance high (1408, plus or minus) would look even better - and with at least a chance that a complete test of the recent swing highs could be seen.

Once the next minor cycle peak is in place - ideally being made as close to June 2nd as possible - then the odds will once again switch back in favor of weakness into approximately June 6th-9th. From there, strength is favored again into around mid-month - though the latter will obviously have to be readjusted with the spectral wave forecast (chart, below), especially as the action continues to progress in the days ahead.

Stepping back for the 3-5 week picture, if and when a low for our larger 45-day cycle is complete, the same should then see a rally into around the second or third week of June.. In looking at a normal statistical analysis of this particular component, if we assume that it will hold above it’s prior low (i.e., the March bottom), then about 80% of the time the next upward phase of the same will go on to take out the prior high for the cycle. In this case, the prior high is the 1440.24 swing top from 5/19/08. Following an approximate mid-June high with this 45-day component, then yet another correction with the same should be seen into late-July or into early-August. 

This article was written by Jim Curry, author of the Market Turns Advisory newsletter.  Visit Jim's website at:  http://www.cycle-wave.com/