The Mid-Channel Pause – 8 December 2012


The FLD Trading Strategy course which started in October has been going really well, with students leading “the challenge” (trading demo accounts for a prize which goes to a charity of their choice) with a return of up to 4% in the first three weeks of trading their demo accounts. We have had so many emails from people who missed the October enrollment that we are starting a new course later this month.

The FLD Trading Strategy makes trades using the 20-day FLD (Hurst’s Future Line of Demarcation), and we identify eight trading opportunities for every 80-day cycle.

We are presently about 20 days from the trough of mid-November, and we are in what Hurst called the “Mid-Channel Pause” for the 80-day cycle. It is a pause in the upward thrust of the 80-day cycle, caused by the cycle two degrees shorter: the 20-day cycle.

If you are trading the 80-day cycle this is when you’d wonder whether you should get out of your long trades because of the corrective move. But it is only a pause, and there should be more of a bull move to come (a C-category long trade for the FLD Trading Strategy)

S&P 500

The S&P 500 has pulled back to the 20-day FLD which is what we expect during the mid-channel pause of the 80-day cycle.

Mid-channel pause for the 80-day cycle

I expect a little more upside from here, before the peak discussed last week forms.

Nasdaq

The Nasdaq too has found support at the 20-day FLD.

Tracking along the 20-day FLD

Euro/US Dollar

The Euro was sailing high above the 20-day FLD, but plunged down on Thursday, and has also found support at that level. If price penetrates the 20-day FLD to the downside then the odds that the trough in November was of 20-week magnitude will diminish, and we’ll see a deeper 20-week trough later this year, or early next year.

Support at the 20-day FLD

Gold

Gold continued to drop from the 40-day cycle peak we identified two weeks ago. It is describing a well-shaped inverted M, or W-shape. It will be interesting to see where this trough forms – if it has already formed then the cycle shape since the peak in early October has a slightly bullish shape, although I expect that bullishness to be short-lived.

The W-shape

30 Year US Bonds

I am continuing to present the alternate view in Bonds, which implies that the 20-week turn (a peak in the case of Bonds) has not yet occurred, although that is becoming less likely. Friday’s strong move down makes it seem more likely that the 20-week peak did occur synchronously with the 20-week trough in the stock markets.

Less likely alternate

Crude Oil

Crude Oil’s 20-week cycle trough formed about a week earlier than the same trough in the stock markets, and it is now heading down to the 40-day cycle trough, leaving a fairly miserably slightly bullish cycle shape in its wake.

A bearish cycle shape

US Dollar Index

The Dollar has finally formed its 80-day cycle trough, bouncing with enough strength to give us hope that the 54-month cycle trough has indeed formed as shown in this analysis.

Bouncing out of the 80-day cycle trough

You probably noticed (if you’ve subscribed to the email feedburner thingummy) that I was joined on our blog this week by an analyst for whom I have a great deal respect: welcome aboard John, I look forward to many more posts! It is particularly interesting that we have a different opinion about the magnitude of the November trough, and I am pleased that we are able to offer you a more balanced cyclic picture now with analyses which will sometimes agree and sometimes differ.

Have a good week everyone, and profitable trading!

P.S. Enrollment for the December FLD Trading Strategy course closes soon, so don’t miss this opportunity to learn how to trade with Hurst’s very powerful FLD.


About David Hickson

I have been trading for over 20 years, but only had any success after discovering Hurst's cyclic principles. Unable to find any software to speed up the analysis process I created Sentient Trader software, which now pretty much does all the analysis for me. I am a film maker and a TV director, but nowadays I mostly provide consultation services to professional traders and fund managers, helping them to integrate Hurst analysis into their trading. I'm South African and live with my family in Italy.

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