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Critical Expiration Cycle

2/8/2015 10:26:53 AM

Good morning Traders,

As the markets have moved all the way back towards highs and are in position for a break out - there's one critical thing they need. Let's go through our charts and models and cycles and see what we can expect:

SPY 2014 Forecast Model

Note options expiration this month is 2/20...

35/105 Trading Days Cycle

This combined view of our cycles and models lines up very well...

2015 10/20/40 Week Cycles

And this view of the actual price movement and our cycles shows 2/17 is a key date.

2015 10/20/40 Week Cycles and Seasonality

Our attention is shifting towards this cumulative volume and the potential break of this pattern.

NYse Cumulative Volume

Shifting to the move in oil - this bottom, while it may get retested, looks like a bottom...

Oil Volatility Chart

Back to the markets, here's the Nasdaq Tick, followed by the NYSE Tick:

NASDSAQ Tick Lows Chart

The TICK Lows - as a measure of sell pressure (or lack thereof) can give us clues on the next likely move...

NYSE Tick Lows Chart

Another component of market movement is fear - and the fear is at a level to support a continued move higher.

Equity Put/Call Ratio Chart

Another way to look at market action (individuals versus pro participation) is climbing.

Equity to Index Option Volume Ratio Chart

The easier calls are when markets are at extremes. The tougher calls are when markets have bounced, and are at resistance. The underlying sentiment, internals and trends can support an advance here - but I believe the key will be bonds. If bonds continue lower - the flood of liquidity in the market will trump ANY indicator. So we remain bullish and expect the market to break higher, regardless of Friday's Dark Cloud Cover (for you candlestick traders out there).

Regards,

 


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