Wednesday, March 7, 2012

Hurst ST Outlook – 3 March 2012

I am tempted to reach for my thesaurus and search for new ways to describe the continued upward progress of the S&P 500. Limping, faltering, eking, straining? At any rate there is no change to the analysis which I believe is playing out, which indicates that the market is due to start falling soon into a trough of the 40-week cycle, expected by late April or May this year. Here is the chart with my preferred analysis, with a subtle 20-week cycle trough on 30 January 2012:

Preferred analysis

Only 21.4 weeks have passed since the 4 October 2011 trough, and so it is possible that a sharp downward move occurring now would be the move into the 20-week cycle trough. As the market falls towards the trough we will have a better idea of the magnitude of that trough as prices crosses FLD’s and VTL’s on the way.

An FLD cascade pattern

Speaking of FLD’s: note the FLD cascade pattern which is developing. In Hurst terms this indicates that the market is “vulnerable to a downward move”. Another factor that makes me bearish at the moment is that so many others are bullish! Market Vane’s Bullish Consensus is at its highest level since October 2007. Remember what happened in October 2007? I continue to be wary of the potential for the development of a long-term straddled trough occurring now, echoing the straddled trough of August 2007.