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. The CPO methodology employs proprietary statistical techniques to obtain cyclical information from price data. Other proprietary frequency domain techniques then are employed to obtain the cycles embedded in the price.
Walmart (WMT) has defied the CPO’s indication that it would top out in the Spring — despite its spike lower in May — and continued to show strength, setting a 2016 high in June. However, now the CPO is showing that Walmart is extremely overbought territory while also facing a downtrend through the summer. This could be a major move that would set up a buying opportunity in the fall as the CPO expects WMT to bottom in late summer and rally in Q4.
WTI crude oil
Back in January (see “Crude bottom is near,” February 2016) the CPO was indicating that crude oil had hit a major bottom. The call, though a bit early, was on-the-money. It also showed that crude would once again turn lower in the spring. Well, the first part of that move came, if a little later than originally projected, and the CPO is showing crude has hit a top and could return to levels not seen since Q1.
The CPO is showing that the S&Ps are slightly overbought as we move into the summer, but is indicating a relatively quiet summer trade. However, after what could be another failed attempt at an all-time high in late summer, the CPO predicts a major downward move beginning in the fall just as the presidential election is hitting its apex and when historically major downturns occur. Note to the next President: enjoy your summer!