An interesting cycle worth monitoring...

Regards - VHF

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Friday Look Ahead

CNBC

November 11, 2010

...Jordan Beck at BTIG has spotted a stock market trend worth noting. Friday marks an important day on his calendar, as it is the end date of a market cycle in a pattern he is watching.

"Since the highs in 2007, there has been a rather steady cyclical pattern in the S and P. I'm looking at the SPY over a three-year period, going back to the high, It's clear every 70 days. That would give us around 11 periods of 70-day cycle patterns, There's been a trend reversal at the end of each cycle. The first major one that people will remember was Nov. 21, 2008. This was the first really major bounce after Lehman," said Beck, equity derivative sales trader at BTIG.

Beck said the stock market turned higher that day and moved higher into January, at which point it sold off. That day in November was also the day that Tim Geithner was named Treasury Secretary by incoming President Obama. The next 70-day cycle after that came on March 9, 2009, the start date for the market's current bull run.

"In the grand scheme of things, technicals work sometimes work quite well, and they work dreadfully other times," said Beck. "With that in mind, it's possible that we're in the midst of another cycle end trend reversal."

Interestingly, as we approach the Friday end date, the big news events for the stock market includes a turn in the dollar and Cisco's big earnings sell off.

Courtesy: BTIG

In the above chart, Beck shows the 70-day trading cycles in SPY, the S&P 500 etf. They are marked by the blue lines. Dates appearing under the chart are represented by the gray lines.

Since the October, 2007 high, 9 out of 10 cycles have occurred on or within days of meaningful intermediate term inflection points on the chart. The exception is June, 2009 when the sell off began earlier in the month. Friday would be the next approximate cycle end. The 122.97 level in SPY is a significant resistance level, corresponding to the 1228 level in the S&P 500, the 61.8 percent Fibonacci retracement form the 2007 high to the 2009 low, to now.