S&P, Ford & gold pointing lower

August 19, 2016 01:00 PM
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 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.

Ford

Ford Motor Company (F) has underperformed during the last year given the overall positive sales figures for the auto industry. According to the CPO, no relief is in sight. In fact, the CPO is projecting a more aggressive downward move for Ford, extending all of the way into November. 
Currently the CPO shows Ford approaching overbought territory with a negative outlook for most of the remainder of 2016.

 

 

 

 

S&P 500

Last month we pointed out a pretty significant CPO forecast for the S&P 500. It showed late spring weakness followed by a push toward all-time highs before a precipitous drop going into the fall. The market did drop off, thanks to Brexit, and is in the midst of a solid rally that has surpassed the all-time highs set in May 2015. 
The updated CPO has the current rally petering out in mid-August before a very ugly fall sell-off. If you weathered the Brexit whipsaw, it may be time to take profit or purchase some cheap puts. 

 

 

 

 

Gold

While the S&P 500 has rebounded and reversed course from its initial Brexit reaction, the gold market has continued to climb in full Brexit fear mode and is approaching overbought territory according to the CPO. 
This could provide a strong shorting opportunity as the CPO is also indicating that gold is near a top and will begin a sharp downturn in August that will last all the way through November.

About the Author

John Rawlins is a former member of the CBOT with more than 30 years of experience in trading and research. He co-developed the Cycle Projection Oscillator, which has been featured in Futures and numerous research reports, with an aerospace engineer to identify the dominant cycles in a data stream and project them into the future. Reach John at johnrawlins@msn.com. @cpopro1. You can reach John at johnrawlins@msn.com.