Due to turbulence in the market the past week I am sure many people were stopped out of their stock trades last week and it appeared as though stocks could be forming a DCL but stocks never really dropped enough to cleanse sentiment like they normally would in DCL's. Cycles do not work well in run away kinds of moves. You don't always get half cycle lows. I think stocks are either in a run away move or they are about to drop the hammer into a recognizable DCL. Assuming the stock cycles are still intact, they are now in day 38 of the cycle. Stock cycles normally last 35-45 days, so at day 38 stocks are in their timing band for a DCL.
A drop down to the 3550 area on the S&P would be scary and would do much to relieve stocks of much of the bullish sentiment. For those who entered or weren't stopped out of stock positions, we suggest tightening up stops. Stocks are only on week 13 of the intermediate cycle, so we still have 2-3 months before we should expect an ICL.
The situation surrounding the metals looks more favorable. Gold is on day 18 and week 3 of what I suspect is a new intermediate cycle. The previous IC was extremely long at 37 weeks. Once price closes above the intermediate cycle trend line we will have confirmation of a new intermediate cycle.
It is not unusual for the first daily cycle of a new intermediate cycle to exceed the previous Intermediate cycle top, meaning it is not out of the question that gold could hit 2889 this daily cycle. We don't feel the need to put the metals stops as tight as stock stops because we are early in the cycle but we will tighten them up just a tad.
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