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fib_1618

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Reply with quote  #1 
Are now up and can be reviewed by clicking here.

Fib

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"As for it being different this time, it is different every time. The question is in what way, and to what extent" - Tom McClellan

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doc

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Reply with quote  #2 
Hello Fib,

The orange bar you have labelled as the MCSUM Gap Support is based on the deeply negative MCO secondary flag from the early May spike down. In this context, it might be considered a MCSUM Gap Resistance. Semantics. In you diagram, the MCSUM has now surpassed both this same zone and the downtrend line you have depicted.

For intellectual reasons I'd ask you to consider and comment on the following two points.

1. The downtrend line could be drawn connecting the first two peaks of the MCSUM in March and early April as I've drawn, rather than the first and third peak as you had drawn since the latter seems to undercut the early April peak. Drawing long trendlines where the datapoints used to draw the TL are very closely spaced together as in either of these cases is always problematic, but you can see the difference it makes, especially as "the speed of trend is slowing" as you point out.

2. Since the secondary flag that makes up the MCSUM Gap S/R is made of a deeply negative MCO that in THIS case has a nearly identical brother the day before, one could reasonably extend the MCSUM GAP Resistance up to include the area traversed by this nearly as deeply negative brother. That would again explain the apparent "speed of trend is slowing" observation.

I mention this not only because my eyes see this on the chart, prompting me to probe your thoughts on this, but also because it dovetails with a Hurst 20wk low that I believe is dead ahead in the next several days.

Thanks,  Doc

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fib_1618

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Reply with quote  #3 
Hi Doc...long time no see...hope all is well.

Quote:
In this context, it might be considered a MCSUM Gap Resistance...

It was Gap Resistance until we broke above it this past week. Because of this, I relabeled the peach zone this week as Gap Support. Your later reference to the position of the zone is also correct as May 6th had a reading of -114 and May 7th had a reading of -123 which created the flag point...the absolute extreme in the short term negative trend of the advance/decline line. Because of this absolute, and to be consistent, the -123 level then becomes the pinnacle point of reference to be used when making comparisons.

Quote:
The downtrend line could be drawn connecting the first two peaks of the MCSUM in March and early April as I've drawn, rather than the first and third peak as you had drawn since the latter seems to undercut the early April peak.

The declining trendline that you see is an extension from the September 2009 MCSUM top which wasn't adjusted when I rescaled the charts last month. However, your trendline adjustment is a valid one to be considered, and might turn out to important in today's context as it does intersect a 250 multiple at the +1000 level where turns in the MCSUM can be expected. Regardless of the trendline, we are highly "overbought" right now, and given the struggle that it's taken to get here from mid September to where we are right now, it wouldn't at all be surprising if we start to top out at any time moving forward.

Quote:
That would again explain the apparent "speed of trend is slowing" observation.

This weeks reference to the "speed of trend is slowing" was based more on the McClellan Oscillator breaking out to the downside of the symmetrical triangle seen on the chart than anything else. One could, I guess, connect the dots to the "almost twin brother" of the May period which would compliment this loss of short term momentum, but it wouldn't be fully consistent to the overall analytical information that these tools give us to work with. If, in hindsight, it does turn out that we start a turn here, I'm more than willing to adjust my thinking along with it as being plausible.

Quote:
...but also because it dovetails with a Hurst 20wk low that I believe is dead ahead in the next several days.

Well, if it's going to be in the next several days, then you're going to have some problems with that cycle low IF the MCSUM does find resistance in this area and then starts to move lower. Not only would any thrust out of this cycle low be short lived, and fully retractable, but given the height of the current NYSE breadth MCSUM, more than likely we're libel to be stuck in a trading range until we see the MCSUM get closer to its zero line. In my work, I give a 2 week window to a 20 week low. So, if the MCSUM does top out near term, and if you can allow an extra 2 weeks from the ideal date of the upcoming low, both the underlying market mechanics and your cyclical analysis would then have a chance of complimenting each other.

OR

The 20 week low came in last Monday as I shared with you privately earlier in the week. And if that's the actual case, much of the above discussion, though poignant, wouldn't be as important.

Anyway, by Wednesday of next week, we should then have enough information to work with to see which of these scenarios are playing out and, of course, it will be discussed in the chat room. I hope you'll have time to join us.

Thanks for the probing questions and allowing me to clarify the annotations.

Fib





 





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"As for it being different this time, it is different every time. The question is in what way, and to what extent" - Tom McClellan

"An economist is someone who sees something happen, and then wonders if it would work in theory" - Ronald Reagan

"What we see depends mainly on what we look for" - John Lubbock

"The eye sees only what the mind is ready to comprehend" - Henri Bergson

“Answers are easy; it’s asking the right questions which is hard” - Dr. Who - 1977

"You know the very powerful and the very stupid have one thing in common - they don't alter their views to fit the facts, they alter the facts to fit their views (which can be uncomfortable if you happen to be one of the facts that needs altering)" - Dr. Who - 1977

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