The Market’s Likely Direction This Week Is…

There is a Fed meeting this week, which means there may be lack of market conviction before the Wednesday 2pm (Eastern) statement and volatility following it. With concern about the Fed changing its low-interest-rate policy, and that technically the market is likely coming off a short-term cycle high, the more likely direction over the next week is down.

Most of the major indexes, and most major stocks, show a clear short-term cycle of about one and a half months in average duration. Market cycles will always vary in length and duration, but if you use Stochastics to help identify lows, it usually will be pretty easy to spot the lows (when in a longer-term up-trend. When in a downtrend, the cycle highs will be easier to identify).

Clear cycle lows will not always show up, as in the chart above. Due to market strength, no clear low was formed in the June of this year. But if you look at a daily chart of the S&P 500 going back many years, you will easily identify an average 1-1/2 month cycle.

You will find many individual, quality stocks, pulling back right now, with their Stochastics indicators just turning down from the overbought area. Adobe Systems (ADBE) is a good example:

So to begin with, the likely direction over the next few weeks, of the overall markets, is down. Throw in a possible Fed indication of rising rates, and the odds aren't great for new highs this week.

With about six short-term cycle lows, on average, in the major indexes in a year, you can usually significantly increase your yearly returns, and percentage of successful trades, by identifying cycle lows in bullish markets and waiting to enter your best trade candidates just as they are coming off likely short-term lows (this will work somewhat, but not as reliably, on cycle highs in bearish markets).

Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day.  To find out more, please click on the following link: www.markettamer.com/seasonal

By Gregg Harris, MarketTamer Chief Technical Strategist

Copyright (C) 2014 Stock & Options Training LLC

Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.

Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.

Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.

As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.

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