Financial Market Time Cycles Update

I commence with my gratitude to The Creator

I am analyzing the Dow Jones Transportation, for a reason. It has been like a trend leader, not a laggard, like QQQ or NASDAQ.

A reader complained that I predicted a swing low on 06/13, and then I reversed my position. If someone looks at my posts without a BIAS, then he/she would know that I am trader, not an investor, and my God-Bestowed-Gift (not my talent, but It Is A Blessings of The Creator He Can Turn that gift off, any time, When He Wishes to do so) is picking the lows and highs for maximum probability of profitability with the least risk (closer stops). As you shall see that 06/13 was “the low” for DJ-20 (see attached chart and same is true for Russell 2K). However, S&P-500 and other indices especially NASDAQ really had last strong shake-up and sell-off after 06/13. Thus was my alert issued on 06/14 to go short again, until I reversed my short position on 06/16. I have certain pre-requisite to qualify for change in the trend and price has to act in certain fashion to confirm the change in trend. Mind you that 06/16 was a swing low. However, Stock markets did perform a retest of that swing low (and most market leader did make a lower low even) after 06/16.

Now coming back to today’s (and yesterday analysis)!
DJ Transportation, just made inverted hammer @ 61.8% retracement from 5/2 high and 70.70% retracement from 5/19 high. Not only it got rejected at 50-days MA, but also its momentum has risen beyond previous crests’ levels, thus creating a divergence. (BTW 6/13 was a turn date on this index)
Russell 2K, just made inverted hammer @ 38.2% retracement from 5/2 high and 50% retracement from 5/31 high and 21-days MA rejected the index (BTW 6/13 was a turn date, but 6/16 retested and become double bottom)

Nothing needs to be added to my previous post (click red link to read), pertaining to (DJI and) S&P 500, as it dropped exactly from yesterday highs (again a price level indicated by me). Nasdaq Composite went within 6 points of my indicated resistance of 2,700 and sold off today. I expected the rally to last 3-5 trading days, thus a turn date of 06/24, matching with my CIT turn. However, if we consider a low from 06/16, then rally has lasted for 4 days or (5days, if we take the high of today as swing high) or 7 trading days, if we consider 06/13 as swing low. Mean of both swing lows (13th or 16th) is (4+7)/2=5.2 days.
Has the pre-condition of rally within a downtrend been satisfied? Probably astounding, yes. However, I will prefer the tomorrow price action to confirm it, too.
Remember we are in down trend. and stock markets always experience relief rallies.

YES, the prudent strategy was being in cash yesterday at EOD, … My biased reader! :-).
On this link I have assembled all of my forecasts starting 04/25/11, which had fore-warned the (serious and sincere) readers of my FREE blog-site, for impending change-in-trend of the markets. Click the link here

What does this analysis mean to you : There is highest probability that we have swing high put in and another leg down about to start. Unless the market Gaps above the today’s highs, and stays and trades above and closes above the today’s high.