Technicals | Feb 09 2011
Market analyst Charlie Chartchecker sent in the following market commentary.
DJIA – Weekly chart
The interesting aspect about market-movement pattern recognition is how points of price action trend change arise where price and time meet.
Logically therefore, if you plug in different time variable coefficients to indicators, ultimately the different varying parameters ultimately meet or compress at the major points in time where the market turns (A). Which leads us to presume from the indicator marked (A), that the present upside has yet to reach a major discontinuation or trend reversal as all variables have not yet touched. All be that is it may, some variable lines already have touched, which may indicate corrections are in store soon, as also signalled at (B), (C) and (D).
On a wider front, regression lines inserted in the chart below help to see the extremes of price action over time, but are unfortunately not easily produced until a history of price action has already set down a footprint. At (B) price action has hit the upper median regression line, while (D) signals a correction is pending.
These points where time and price meet lead to cycle theory where some analysts produce cycle dates in advance to show where markets will stop and reverse or correct. Below is one such cycle chart of the S&P with related commentary produced by one such prognosticating service. Notably the 62 period cycle repeatedly shows itself to be a market support point and the 59 upper cycle a resistance. It is interesting to those who spend time reviewing such information, how all these different methods can come together to confirm each other.
The last 62 week cycle continued to boost this market. Considering all of the bad news that this market has observed, it was a potent boost to keep the Equities climbing higher.
This market continues to track the median, suggesting that there is little selling and continued support. Small bars reflect record lows in volatility.
From the previous edition: “Although any DC time cycles can provide highs and lows, the probabilities of a 62 DC week cycle terminating the rally from 08/10 are remote”. There is a 44 week cycle expiring this week, but that is not a number that has been an habitué of this market.
Charlie Chartchecker is the pseudonym of a 52 year old Project Director and Forensic Market Analyst with trading experience since the 1980's. All analysis, conclusions and views are his and not FNArena's.
Technical limitations
If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
