LET’S LOOK AT THE S&P 500 DAILY CHART

Two weeks ago we forecast the low on the 31^st of August and indicated the cycles said a rally of 30 days was the highest probability and that remains our forecast.  But there is a caveat here that will take a bit of explanation.  “Time cycles” can be viewed as support or resistance in “time” just as “price” is viewed as support or resistance.  The index is up now against the “obvious” resistance of the two previous highs.  And there is a cycle that also offers resistance in “time.”  Just as price resistance can be overcome so can “time” resistance.  The chart shows the one year cycle divided into 1/8^th and 1/3^rd.  This has been a solid vibration in time and does leave the index vulnerable to a counter trend or resumption of the trend down after this weekend.  Or the index can overcome this resistance in “price” and “time” and blowoff up into the 90 time window that started from the July low and expirers the 30^th of September.  There is nothing on this chart to indicate a top here since there has been very little volatility in this congestion so far and we would expect some congestion at the “obvious” resistance.  Let me summarize; there is a chance for a high after this weekend but so far little to indicate that as a probability.  The best time frame to complete this rally is after the 30^th of September.  If the index struggles down into that date with a first degree counter trend it could set up a low and run another 30 days.  But for now the forecast is for that 90 cycle to be a high point.

WITH THE ACTIVITY IN CURRENCIES LET'S LOOK AT THE DOLLAR INDEX

 

There is a pattern that can indicate the dollar just completed a counter trend rally in an ongoing bear trend.  There are three thrusts followed by a lower high and is a pattern that can complete a movement if a counter trend.  The rally only made it up to a 3/8 retracement of the range down and that keeps the down trend in a strong position for the next move down.  If there is a rally it should be less in points than the previous rally and should be stopped by the low of September 6^th at 82.3.  It could get a few ticks above it maybe 82.39 but that should be the extent of the rally if the down trend has resumed.  Or if there is no rally then we can also assume the down trend is resuming.  If the trend is down then next low will be either the 5^th of October or the 29^th of October.  If it exceeds the 83.4 level then the trend is not down. But with all the action in the currencies lately and how the US stock indexes can rally on a falling dollar it is worth monitoring this index.