Wednesday, May 18, 2011

Market Bottom? - Inflection Point Model

In the name of God, who granted me insight, knowledge and wisdom to walk through the confusing financial markets. On April 18, 2011, it was stated that the inflection point models were suggesting a bottom in the financial markets around April 18, 2011 (+/- 4 days). By the grace of God, it turned out that even in the midst of US debt downgrade by S&P on Monday (April 18, 2011), stock market bottomed on the same day, and zoomed 5.8% higher over the next two weeks. 

Since then the market has chopped around without exceeding the May 1st 2011 highs. Although I have been out of the market during this chop fest, I am keenly watching the unfolding socioeconomic situation, Elliott Wave pattern, sentiment gyrations and the Inflection Point Model. 

Model 1 and Model 2 first produced the mid May turn date in April 2011In order to further refine the projections, the two Inflection Point Models were re-run and following conclusions were achieved. 

Model 1 and model 2 are both suggesting that the next market turn date should be around May 16, 2011 (+/- 4 days). Therefore, we can have a turn window from May 11 to May 20. This means that it is possible that we might have seen the bottom today i.e. on May 17, 2011 @ 1319 (SP500). Furthermore, this level also sports various support levels and the week of May 16 is also the options expirations week - many times market turns during options expiration week. 

I will further analyze the market from the following perspectives to better understand the future market trajectory:

1- Sentiment
2- Elliott Wave structure of Indices, US Dollar and Commodities 
3- Technical Indicators

These will be discussed in an upcoming Market Matrix post. In short, we might be nearing a significant bottom or might have already bottomed. Therefore, one should be vigilant for potential long opportunities. If market closes below 1312 then one should become much more careful, as this would suggest that market has larger downside potential. 

P.S. During the last month I was busy with my finals, and that is why blog posts were very infrequent.

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