Thursday, April 10, 2014

Pullback Cycles Redux

I put up a post in the beginning of February about pullback cycles.  The most common cycles were the 5 day, the 13 day, and the 22 day cycle, all +/- 1 day.  Unfortunately, the last pullback lasted 10 days, so it didn't fit into any of the common pullback cycles.

I believe we are either in a 13 day or 22 day pullback here.  Right now, with selloff beginning on Friday, April 4, the selloff is now 5 trading days old.  If we are to have made a bottom today or tomorrow, that will put it in the 5 day pullback group and we could keep going higher for weeks.

I don't believe this is a 5 day pullback, because of how this market sold off after getting two doses of good news, one big one in the dovish Fed, and the second small one in the low jobless claims number.  We'll soon find out, because we'll have to rally either tomorrow or Monday above SPX 1850 to validate that the pullback is over.

If we are to embark on a 13 day pullback, which I view as most likely, that would put the end of the pullback on Wednesday, April 23, +/- 1 day.  This is what I am preparing for.

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