The Power of Timing

I know some of this stuff seems like voodoo, but when computers are doing a significant majority of all trading, you need to use their rules when making decisions. One of the tools they are clearly using is cycle timing. This week, the Euro had several key time cycle dates on Wednesday and Thursday.

I wrote the following earlier this week –

“The Euro (6E Z0-D) has been hit very hard this month. Timing comes in Wednesday and Thursday this week, with the next support level not far below current price. Price does not have to reverse here, but I will be on alert, because this market has traded so technically this year.”

The Euro and risky assets reversed violently!



The S&P 500 (ES Z0-D) also had timing this week (pink bars below price) and has gone vertical after holding support on several occasions in the 1,170 range. The recent uptrend saw a decent correction that lasted a month, and the market is now back in rally mode.

IBD still shows “Market in Correction”, because there was not enough volume on Thursday to declare a “Follow Through Day”, but leadership is working and there has been plenty of Follow Through (significant accumulation by Institutional investors) in Gold, Oil, industrials and Transportation.

The next key resistance level is 1,239 and the longer term critical levels are around 1,263 and 1,300. If we hit those levels with longer-term timing, you know what I will be doing…



Crude Oil (CL F1-D) held support, with timing last week. That got me into Oil early. You can see the reversal pattern set up in Crude and the next potential resistance levels. The old adage is that stocks that go to $90 eventually go to $100. It will be interesting to see how Crude reacts if it gets to $91. Now I look for potential resistance levels and will make decisions if prices get to these levels.



The 30-year US Treasury (ZB H1-D) is in freefall. November was a rout for Municipal, Corporate and Treasury Bonds. Significant support is in the 122 range. I think that will translate to about $93 on the 20-year Treasury ETF (TLT). I will be looking for a potential reversal soon out of Treasuries. The key to the rally has been a selloff in the US Dollar. When it reverses back up, I expect Bond prices to also reverse back up. December should be yet another crazy month.



Gold had timing today and was at resistance for much of the morning at $1,405. It eventually blasted through this area and closed the day at $1,414.80! I am assuming that there were some shorts anticipating a reversal at $1,406 and they are now in the process of covering their shorts (buying). Next resistance is $1,452. Let’s see if prices can work their way up there. Next timing is next Friday.



Now I look to add on weak, low-volume pullbacks into obvious support. Like how Financials (XLF) pulled back into the old resistance level at $15.00 this morning. The breakout in November failed. Sometimes the second mouse gets the cheese…