S&P on support

The S&P 500 last week, pulled back to the 21 day moving average(yellow line), after testing the monthly R2 pivot(blue arrows and green line marked R2) at 1074. When the S&P hit the monthly R2 pivot last week, I knew there was an 85% chance that the index would not close above R2, and to look for a little pullback. With the end of month and end of quarter this week, we could rally back up to 1074, and make a right shoulder. If the S&P closes below 1040 this week, look for a fast fall down to the monthly pivot and 50 day moving average @1013. We get new monthly pivots on this Thursday, October 1. Monthly pivots will tell us where to look for support and resistance, for the month.

The 10 year cycle

The stock market the past 30 years, seems to be following this 10 year cycle.

YEARS ending in;

0. deeply depressing mood disappointments failing economy & businesses, unemployment etc.(in 2000, 1990 & 1980...big correction years)

1. More of the same but worse. (2001 and 1981 where ugly down years)

2. Amidst far worse mood, the fundies actually bottom out as do prices, however people are so badly burned out by the doom & gloom few spot it & even fewer trust it - this is the actual market bottom in many assets real & financial often, amid a crisis. .(in 2002 and 1982 markets started to bottomed)

3. Quietly recovering still lots of distrust & very little feel good around. (in 2003, 1993 and 1983 where big up years, after bottoming the previous year)

4. Have things really been going UP for the past 1-2 yrs ? Quick buy something!( in 1984, 1994 and 2004 where consolidation years...the market went sideways before starting a new up trend)

5. Amid a modest dip & sometimes mild panic that turns into consolidation, gives way to the strongest up wave. ( 2005, 1995, 1985 =market was up)

6. Now things are really getting hot, prices are rising rapidly , the media is excited, etc. However, the astute observer sees that under the hood cracks are beginning to appear, tops are being built, etc. (in 2006, 1996 and 1986 where big up years)

7. The public thinks things are never going down again, but mid year, markets top out & towards the end. They give a violent warning of their wrath to come.( the 1987 crash, in 2007 the market topped )

8. Armageddon! ( markets went down big in 2008 and 1998. In 1988 it was a flat year, due to the '87 crash, a few months earlier)

9. Huge relief bounce that eventually rolls over, setting up for the disappointment of a long winter of years ending 0, 1 & 2.x. Media is excited, disaster has been averted, depression / recession, etc., is now over. Buy! Buy! Buy! Supposedly, this is the year that the markets / economy, etc., finally is coming back, etc., Or is it ? ( in 2009, 1999 and 1989 the stock market had a big up year)

Canadian dollar at major resistance

For my Canadian friends: The Canadian Dollar(loonie) hit the yearly R1 pivot today(purple line R1). And the US dollar hit it's yearly S1 pivot today. Look for a pullback in the Loonie and a bounce up in the Dollar.

U.S. Dollar on Yearly S1 pivot

UUP is the ETF for the U.S. Dollar index. It is testing the yearly S1 pivot here. Look for the U.S. Dollar to bottom here and the Euro to top out at 1.4737, which is the Yearly R1 pivot.

we are now in the "Gap Zone"

S&P has now entered the gap zone from last October (see blue arrow on chart). Typically the gap gets filled. But we are also at the monthly 20 moving average too(see earlier post on the 20 month moving average).

http://mpgtrading.blogspot.com/2009/08/s-20-month-chart.html

Gold close to a top?

December Gold is very close to it's yearly R2 pivot(purple line marked R2) at 1026.2, and it's 2008 high at 1033. Be careful of double tops!

Natgas up 50%

Natural Gas is now up 50% from my bottom call, several days ago. My target is $3.94 at the monthly R1 pivot(green line marked R1). Monthly S1 is where I made the bottom call.

Natgas update

Natgas closed at $3.25 today........up 30% in 1 week, since my bottom call last week on the monthly S1 pivot. 1 natgas mini futures contract(QG) costs $1500 and pays $25 per penny move. If you would have bought 1 at Ms1, you would be up $2000.......... Pivots are a traders best tool! They tell us where the risk vs reward is the greatest, and when we are wrong, so we can take small losses.

Natty bottom?

Natural gas is trying to bottom on the monthly S1 pivot(green line marked S1 and blue arrow) after hitting 7 1/2 year lows this week. Natgas has fallen almost 50% in the past 30 days! Is today the bottom or just a dead cat bounce, as the saying goes? Picking bottoms is a very dangerous game! Monthly and yearly pivots can give a clue as where to look for possible bottoms and tops. UNG, the natgas ETF, came within pennies of testing it's yearly s1 pivot(1st yearly support) this morning at $8.65. That's a possible clue that natgas may be close to bottoming. Bottoms and tops are usually a multi-week process.....not a 1 day event..........USE STOP LOSS ORDERS!

Gold at Mr2

Gold is testing the Monthly R2 pivot at $995.63. Will the monthly R2 pivot stop the run? There is an 80% chance that it will. Trading is playing probabilities. Pivots give traders the best odds.

my favorite play

The NDX 100/QQQQ and NQ futures opened at the R1 pivot this morning, as seen on this 5min intraday chart, and came down to the S1 pivot for almost 20 points(see blue arrows). My favorite play is to short R1 on the open or buy S1 at the open(if price is there), for a quick trade. The best trades are in the morning from 8:30am est to 12:00 noon est., and then the market goes into chop for 2-3 hours. The last hour of the day, is when the professional money mangers come out to play.

Ugly day

The S&P 500 could not close over 1033 as per my post last week. We now have the pullback/correction I'v e been looking for. Is this the start of a big melt down like last year? Maybe, but probably not. I think we go down to the yearly pivot(yellow line marked P) at 975. The monthly s1 pivot could provide strong support at 986 too, but watch 975. We break that and then 950 is next support. 1013 is next resistance above and can be shorted with a 1018 stop loss.