Slow January?

With the S&P losing support so early in a new daily cycle on Friday I’m afraid we’re probably set up for a choppy market in January.


I had my doubts as to whether the market could break through 2100 on the first try, and Friday’s move has probably confirmed that it is not going to. With the market starting down into a half cycle low, along with an upcoming earnings season, ECB decision on QE (Jan. 22), and Greek vote (Jan. 25) I expect the stage is probably set for the market to chop sideways underneath 2100 for most of January before a brief breakout late in the month.

spx choppy jan

As a matter of fact I suspect the entire first quarter is likely to be difficult as I expect the rally out of the early Feb. daily cycle low (diagrammed in the chart above) will probably form as a left translated cycle and then drop down into a sharp intermediate correction. Why? Because I expect Yellen will set a date for the first rate increase during the Feb. Humphrey Hawkins address. The market will rebel by falling hard into a deep intermediate degree correction. (Don’t get me wrong, I’m not calling a final top, I still think there is little chance the market tops before the NASDAQ reaches 5100.)

spx next ICL

If the move is deep enough it might even trigger QE4 and that could give us a final parabolic move to top off this QE driven bull market. 

So if stocks are going to be stuck in a volatile trendless consolidation for a while then where can one make money you ask?

Day traders may do OK in the weeks and months ahead, but I think the most likely place for at least a tradeable trend may come in the commodity markets. They are way overdue for a counter trend bounce, especially oil. Just don’t get too greedy as it’s still too early for the CRB to form a final 3 year cycle low, so this will probably be short lived. But we could see commodities rally for a month or two before resuming their bear market trend into a final bottom maybe later this summer or next fall. 


This would square up with the dollar moving down into an intermediate correction as it is also way overdue to take a breather.


The key is oil. Oil has to break free from OPEC forces trying to push it down. In order to do that it’s going to need some help from the dollar. So watch the dollar for a sharp break to the downside in the days ahead. A large volume spike on UUP on a down day would also be a clue that the intermediate tides may be ready to turn… at least for a month or two. 

8 thoughts on “Slow January?

  1. Robin

    Hi Gary,
    I think you are going to be taken to the cleaners with you prediction of the Feds raising interests rates anytime soon. The American economy is very weak in a more stagnating rest of the world economy. This is bound to have a negative effect on their economy and I beleive has already if they released honest accurate information. I have other real facts and figures that would cast serious doubts on any kind of legitimate recovery going on. Plus their dollar is strong and has been getting stronger VS basically all other currencies which would make them less attractive to trade with. An increase of interest rate would also increase the cost of servicing their massive multi trillion dollar dept. Mind you I beleive they know how futile of a situation they are in and it is dangerous to disappoint the over inflated and leveraged American markets that they may make a minimal increase in 6 months or so just to keep face and to continue with this charade just a little bit longer. Mind you I think this allusion is going to be quite clear by then. We shall see.

    1. gary Post author

      I think you misunderstood the article. I didn’t say Yellen would raise rates at the Humphrey Hawkins speech, just that she may give a firm date when they would commence. That would probably tank the market into the normal timing band for an intermediate cycle low (mid March to mid April).

      If the sell off is intense enough then we might see QE4 begin.

    2. Robin

      Sorry Gary I jumped the gun you didn’t make any prediction of a Fed interest rate increase only speculated Yellen would set in February a firm date for the first rate increase. My apologies Sir.

      I would however doubt any firm date would be set in February anyway as even possibly by then it maybe all too clear that any increase would be completely unwarranted if not then at least remain in the “not raise interest rates anytime soon” mode.

      1. Robin

        By the way you have a nice site here and I drop by almost every day for your updates as I am a firm believer in charts and your prognostications seem quite reasonable and I appreciate the time you put in to provide your take on things. 🙂

  2. Bob UK

    Is it possible that we see the S&P go back below 2000 next week, down around 100 points, which would then perhaps be a good buying opportunity prior to the earnings reports getting under way? Or is that a silly notion?

    I am just thinking that all we need is the likes of Apple and Co coming out with reports of a bumper Christmas for iphone sales or Netflix sign-ups and we will be off to the Moon again.

    As for gold – no idea. It could shoot to the Moon or crash to the ground. Seems to me that higher powers are making a good living making 5% and 10% gains on the miners both long and short via manipulation.

    1. gary Post author

      I kind of doubt the market would drop that much this early in a daily cycle. This should just be a move into a half cycle low. Those usually terminate pretty quickly once short term RSI reaches oversold.

  3. arthurk

    Its really funny that a few weeks ago when you were predicting a run up to SPX 2300 by Mar-Apr, I said that 2015.Q1 would probably be weak due to the negative effect of the strong dollar on EPS. I also indicated the possibility of a retest of the Oct lows.

    However, on reviewing some of my historical charts, my conclusion is we probably only get a high level consolidation Jan-Mar with a low around SPX 2000, possibly around the end of Jan. Then Apr we begin the march to SPX 2300, probably with ECB full QE.

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