The Cycle Projection Oscillator (CPO) is a technical tool that uses complex algorithms to filter multiple cycles from historical data, combines them and gives a graphical representation of their productive behavior. Several articles in Futures have highlighted the CPO’s ability to find market turning points, alerting you to the 2003 Dow bottom, the 2007 equity top and the December 2008 bottom.
"It’s time," shows that the CPO is indicating a significant top in the S&P 500 is at hand. The red line is the forecast.
This link shows a playback of the S&P 500 weekly CPO analysis using parameters that were established in 2003. The playback begins in November 2007 showing the CPO analysis with the actual weekly close on top and concludes on Nov. 8.
We first pointed this out on Oct. 17 and by Nov. 8 (when the above snapshot was taken) a turn seemed imminent. The S&P turned lower last week and today's action appears to validate what the CPO has been indicating. The CPO was a little premature indicating a top earlier this year and measures broad moves but it has been accurate and an analysis of this weekly chart indicates that between now and the end of April 2011, we will take out the July lows and push towards 975 in the S&P, and then see a rebound to the 1050 area by September of 2011.
John Rawlins, trader, analyst, consultant and developer of the CPO can be reached at firstname.lastname@example.org.