Stockmarket Cycles Daily Phone Update

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(Daily Phone Updates for the market are available with a subscription to Stockmarket Cycles. The following is a previous Daily Phone Update.)

Stockmarket Cycles update for Friday, November 3rd

Although it would appear as if lower nominal 20 day projections have now been confirmed by the New York Composite Index, the fact that the S&P futures finally reached the intraday window of their nominal 10 day downside projection suggests the possibility that the market might attempt a one or two day rally from current levels. Should it be a strong enough rally, downside projections could quickly be invalidated. The market is, however, quickly running out of help from potentially positive monthly seasonality.

There is a newsletter going out this weekend that contains a fascinating cyclical or turning point pattern. We note in the newsletter that the pattern looks eerily familiar but a cursory look at newsletters over the past few years showed no trace of a previous mention of the pattern. The pattern begins in October 1974 and is 77 months long. The three resolutions after October 1974 are bull's-eyes at important monthly peaks. Those months are March 1981, August 1987, and January 1994. The next resolution was due ideally in June 2000. As it turned out, May 2000 was the exact midpoint month between the very important highs registered in January 2000 and September 2000 on the Dow Jones Industrial Average. If you move another 77 months forward from the ideal resolution in June 2000, you arrive at November 2006. If there is to be an important resolution in November 2006, it is hard to conceive it would be anything but a market top because October 2006 marked the third consecutive higher monthly high and the fourth consecutive higher monthly close. It would be hard to argue that that is the set up for a market bottom. We also note in the newsletter that it is almost equally difficult to make a strong case for a market top. The month of October marked the 17th consecutive October within the 4 year cycle since 1942. Without exception, every single October within the 4 year cycle pattern was a virtually riskless buy zone. In other words, there have now been 16 consecutive Octobers separated by four years that have been virtually riskless market junctures. It is very difficult to argue against that kind of consistency. We discussed this theoretical impasse in this weekend's newsletter.

The McClellan Oscillator closed today at -106.9 with the McClellan Summation index at + 4,086.5. The ratio adjusted McClellan Oscillator closed at -27.7 with its Summation index at + 929.3. The CI/NCI ratio closed at 1.034. Here are today's Trading Index moving averages:

Single-day	1.09
10 day	1.15
Open 10	1.09
New 10	0.89
Open 30	1.04
TRIN 5	6.20

Mutual-fund switchers-Rydex switchers are in 100% cash positions. Fidelity Select switchers are in Fidelity Select Gold. All mutual-fund switchers should call the telephone update each market day after 3:20 p.m. Eastern time and each market evening.

Stock-index futures traders-we covered our December S&P short positions at 1,369.60 for a profit of 23.10 on the trade. We will stand aside on Monday.

The bonds did not fully meet their upside projection of 113 27/32 but they did move into the projection window once again and suffered a sharp reversal today, declining by more than 1%. The downside projection to 108 9/32 continues outstanding. Gold, the metal itself, after having a significantly lower projection outstanding for almost two months, invalidated that downside projection this week. It is a bullish occurrence but it stands on tentative ground because the projection could be quickly reinstated on weakness over the next week or two. Have a great weekend. We will talk to you on Monday.

This page updated on 12/12/06