Peaks are rounded in stocks 3


One of the major lesson I have learned in recent years is patience, and this patience must be broad in two sense.

First, patience for leaving patterns and wave shapes to manifest themselves. Hurst it self made some interesting approaches to traditional technical analysis and cycles, explaining, from the cycles perspective, some typical patterns like triangles or head and solders.

Second, patience for deciphering which are very good opportunities from those which are just opportunities, it can be translated into, let’s take the most effective opportunities.

Another important and interesting lesson I have learned from David is about “the character” of a market, as a rule of thumb, there are 3 major types: stocks, commodities and forex. This character manifest itself regarding to the type of peaks and troughs they do:

– commodities: normally, peaks are V type (inverted) and troughs are rounded

– forex: peaks and troughs types alternate, if a peak is rounded them a trough is expected to be V type. I would say it depends on the dominancy of a currency

– stocks: troughs are V type and peaks are rounded

If it is the rule, rounded peaks or troughs are the synonymous of complex formations or, in terms of cycles, volatility in placing the final peak or trough,  or, also, a synonymous of danger!

So, if we look to the indexes and the cyclic status of them I would say that volatility in terms of cycles is increasing, that a complex formation is unfolding and that there are still surprises for both bearish and bullish opinions. It is time to take care and leave the pattern to manifest itself, once it is clear, a safer entry can be done.

I suspect that major indexes are in the middle of a complex situation where the next phase is up, thanks to intermediate cycles and shorter cycles, meanwhile the long term pictures is getting very bearish. I leave you my latest long term analysis over the SP500, I’m expecting indexes to be supported or up from some day here up to the end of the year, them 2 years of downside!

SP500

Best

José

 


About José

My passion for market analysis was born 25 years ago when I started to work at a bank's trading desk, which I did for 8 years. Since then I have never disconnected from the markets but have been involved with varying intensity. I define myself as a serial entrepreneur, launching different start ups, together with my closer colleagues, in areas like dot com business or R&D in energy efficiency. In 2009 I started to trade markets as my principal task, in early 2010 I discovered Hurst and Sentient Trader's "academy". Since then, cycles and trading have become my way of living!


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3 thoughts on “Peaks are rounded in stocks

  • SilentOne

    Hello Jose,

    Yesterday’s trade on most US indices was the highest volume trade since August 2011. This suggests we are close to putting in a cycle low. Yesterday’s close on ES was 1846.5. The YM was roughly 16008 and the TF was 1065. We need closes above these levels to suggest a low has formed. There is still risk that we see more tests of the 1815 and 1800. The SPX is fighting hard to stay positive on the year.

    I am looking at a potential turn here next week, although I accept that the low could already be in. What do you have for your timing (blue band) for a low?

    cheers,

    john

    • José Post author

      Hello John

      The analysis is based in looking for the “most optimal” oscillation, in other words, we try to analyze the quality of a oscillation throughout a spectrum of them. Once we have the best fit then we have the best time projection, the blue vertical line. Of course it is subject to variation due to the principle of variation but it is quite stable as we know, it tends to tune itself as time passes and approaches the moment .

      Here are the latest readings

      Hope to help

      Best

      José

      • SilentOne

        Jose, I was hoping you would say that. I have the end of next week as the low to buy for a swing long and we should see Hurst signals from thereafter. TWT. Many thanks for posting.
        cheers,
        john