On Monday, Dec 16,2013 we wrote about cycles that were bottoming and a market that should turn bullish in the second half of December. (Today, Dec 18, it all came true):
In the case of the market, it's a pretty sure bet the markets have landed and that the intermediate advance will grow legs when:
- The long term cycle is still bullish.
- Short term/momentum cycles are deep in the lower reversal zone and quickly turning up.
- The 8-10 day cycle has bottomed.
- Medium term filtered cycles are rising.
- Indices are easily breaking above declining averages (21/14/10/5).
- Breadth numbers quickly expand, with new lows shrinking to nearly zero.
- Our new indicator (what shall we call it?), shows the the SPX is out of the RED, and the fundamental has bottomed.
Not all of those conditions will exist on the first day of a reversal, but many will. Confirmations of a strengthening advance will continue as stocks climb above their 5 DMA, that 5 DMA turns upward, new highs expand, and the fundamental frequency keeps rising.
As we discussed during our Friday Wrap, we can "target shoot entries" on the DDM, QLD, SSO, by placing a buy stop above the upper donchian channel on a 60 minute chart. That way, we get in on any channel turn.