Nasdaq 100 Market Data:
1. 41 days = High- Low Correction (Sept 21 - Nov 16)
-Median High-Low Correction in Bull Market (2004-2012) = 26.69 days
-Mode H-L Duration = 15-25 days
-Only 5 of 31 Total H-L Intermediate Corrections since 2004 have exceeded 35-50 day duration (16%) -- the current duration parameter.
2. 118 Days = Current Intermediate Low-Low Swing Duration (June 4 2012 -- Nov 16, 2012(??)). Assuming Friday Nov 16 is an intermediate Swing Low.
-Median L-L Swing Duration since 2004 = 68.55 days
-Mode L-L Duration = 60-90 days
-Only 2 of 21 L-L Intermediate Swings in the sample (2004-2012) have exceeded the 100-120 day parameter (ie., 120-140 day duration) and both occurred within the 2008 Bear Market.
Intermarket Data
-None of the Major US Averages (Dow 30 Ind, Dow Transports, S&P500, Nasdaq100, Nasdaq Comp, Russel 2000) have breached previous intermediate lows in this current correction, implying the Bull Market since 2009 is still broadly in effect.
-Russell 2000/Transports are on the edge of this precipice.
-Dow Theory would tell us that there is a Major Non-Confirmation of the Dow 30 Industrials new high in Sept 2012 as it was un-confirmed by the Transports, which have been lagging on the day charts, but leading on the weekly charts.
-Transports level to watch: 4795 - any weekly closing < this level would indicate a Bear market behavior in this average and may imply the Industrials are not far off in following this path.
-All the major averages listed have increased > 100% since the March 2009 Lows as we approach the end of the 3rd year of this Bull Market duration (March 2013).
Macro-Fundamental Focus:
-Austerity in 2013 combined with continued fiscal support for US Bonds by outright Fed purchases (inflationary effects offset by reduced velocity of the money supply due to expectations of lower growth = stagflation scenario with expectations the FED will continue its 'inflationary' campaign)
This would imply that the market focus has shifted from an expectation of renewed QE and the perception of inflation since 09' to a stagflationary expectation (non-growth, low growth) implying a cautious position by Fund Managers/Institutions.
So either we're at a very good short term buying opportunity or, this market is signalling the start of a new major condition in US stocks.
Seeing that the conditions of a Bull market remain intact, by virtue of the breadth of the Bull structure across all Major Averages. And given extent and duration of the current correction as it relates to intermediate lows, wee could expect a rotation Up in the coming days-weeks. But sentiment has changed, and we will have to observe first, a weekly rotation higher (weekly up swing) and examine the quality of the rotation, if it occurs.
The most destructive scenario would be a continued decline in stocks, violating June intermediate lows, without any reversion or development.
With respect to the NQ (Nasdaq 100 futures):
We had a strong short covering-driven reversal early in the trading Friday, that would be considered disappointing into the afternoon, however, the market managed to close > Quarterly Time Frame Low at 2516, which was my target low for this correction. Though we didn't see continued 'buying' into the afternoon, we did get a momentum reversal off the lows. This 'Spring' statistically correlates to upside continuation, despite the market not generating a short term or intermediate term BUY signal. And a tradable reference pt low at 2492 - given the trigger for short covering/new buying.
Going into Monday Nov 19, we need to see where the market is going to develop and if it does > than the afternoon pullback low at 2516. If the NQ starts selling off < 2516 and closes < 2516, this market can potentially come all the way back to 2011 Tops/June 2012 Lows in this current swing/short trade.
If the NQ closes > 2516 and develops > 2516 tommorrow, there is a high probability that we get a buy signal early next week.
From the image below of the NQ day chart, we can see the market coming back into the convergence of
'strong support' trend line and 'quarterly lows' in this 'normal' velocity pullback of extended duration, which could be setting up for a reversion trade in line with the November 28, 4 month cyclical turning point which seems to be indicating a market low as per the current activity.
