Wall Street Watchman: Stock market weekly review and outlook update

6/03/2011

Stock market weekly review and outlook update

What I have seen this week is enough for me to write an update of my 2011 stock market forecast and confirm it: the stock market has topped in May, it will not revisit the beginning of May high at 1370 in the S&P 500, it will remain weak through the summer but without falling below the March 2011 low at 1250. Sometimes during the summer the stock market will try again another run to the highs failing and falling back to the 2011 opening level and it eventually will concede in September.

You can say that it is the economy that is eventually affecting the stock market, I claim that it is the cyclical nature of all things: cycles are demanding this stock market behavior and this market junction was predicted with months in advance by cycles while economists and market annalists have turned negative on the economy only over the last few days after having been surprised by the latest string of weak economic data.

My 2011 stock market forecast chart

Current stock market chart

Since the market forces seem to be confirming our outlook I think the best thing to do is to continue to sell rallies and not to insist to much in chasing the market lower when it falls, keeping in mind that we think that it could be holding above the last March low through all the summer till September.
Very short term there is some kind of support in the 1280/1285 area should the market decide to test lower levels next week, in that area the Moon Cycle could try to turn, before that happens any rebounds and rallies could be sold as long as they stay below 1325.

From wall street watchman public chart list (if you like it vote for it) Moon Cycle

From my post about the chances of a major stock market top in May:

"...the 2009 low was preceded by a Jupiter-Mars conjunction approximately 15 days before the actual low, this astronomical cycle is very important for stocks as the readers of my WSW book know well and this cycle is completed because Jupiter and Mars were conjoined on May 1st, 2011 this mean that there is a 2/3 weeks time window for the major top to form. There are plenty of divergences in place for the current trend that is a bit overstretched technically speaking and withing a couple of weeks additional divergences could and should form if a final top is to be marked on the S&P 500 chart. I would like to see in particular an AD line non confirmation of the top over the coming days..."