This was sent to QT clients on 12/31/2012 for 2013 Q1. Nothing has been omitted or added from the original. See the review in the section below the original text called Results.
"The overall theme of 2013 Q1 is improvement. In a rough sketch, January (especially the first half) is weaker; February should be stronger yet still at risk for deeper pullbacks and/or low tests; then March (especially the second half) is the most bullish.
USA markets are now primarily moving on the political issues of the fiscal cliff and debt ceiling. As of this writing a deal appears likely; however, it is not certain that it will pass the Congress. I don't know when these combined issues will be resolved to the market's satisfaction, yet can point to key timing. As with the examples from 2012 above, if larger uptrends are intact for 1/16-17 key lows (ie most bullish would be above the daily 20MA with a rising slope) then that would be a bullish setup. A bigger picture view is this: if the S&P remains above its weekly 50MA through the end of January, then Q1 should turn out bullish with a good chance of exceeding 2012 highs by quarter end. Given chart structures as of 12/31/2012, this is the preferred scenario.
A bearish scenario is still possible if Congress rejects any fiscal cliff deal and/or gets hung up on debt ceiling issues like July and August 2011. During that summer the drop of 4 weeks (weekly bars of 7/24, 7/31, 8/7 and 8/14) was -18% from high to low and took until mid January the following year (about 5 months) to fully recover. If the weekly 50MA breaks on weekly close in 2013, then it will take more work to recover the bullish territory. Markets may go lower into February or even some chance to the 3/1 key low. Even if the bearish scenario plays out in 2013, though, I don't expect the same amount of damage so the recovery period should be similarly reduced. Depending on the decline, it will take until late Q1 or early Q2 to be at the 2012 highs at 1474 SPX.
1/2 week: Probably up overall with 1/3-4 high.
1/7: Weaker 1/7-9, then some up. Mixed signals.
1/14: Down, especially into key lows 1/16-17. If deal is already done & passed then key pullback lows here.
1/21: Expecting up, especially into 1/22-23 high.
1/28: Mixed signals with 1/29-31 key low.
Note: If 1/29-31 low is higher than 1/16-17 then overall bullish. I think one of these two key lows will turn out a major low.
2/4: Expecting up.
2/11: Mixed signals.
2/18: Preferring up overall with 2/20 low.
2/25: 2/25-26 high, then down to 3/1 key low.
3/4: Some up.
3/11: Should be up.
3/18: Up overall with 3/19 pullback low.
3/25: Big breakout up. 3/28 will form some kind of high, but expecting higher highs in Q2. Therefore, there are no key highs listed for Q1.
Bottom line is that we should see improvement overall for the quarter. If you scan the weeks above, January has up / mixed / down / up / mixed with drop into 1/29-31. February is up / mixed / up / 2/25-26 high then weaker. March is some up / up / up with pullback / big up. The bullish scenario would be some up / range bound / struggle for most of January, a better move up in February, then a blast off in March (above 2012 highs) that probably continues higher in Q2. The bearish scenario would be down for January especially into 1/16-17 and 1/29-31, stabilization in February, recovery and still expecting a healthy move up in March after the 3/1 key low.
As of 12/31/2012, the SPX quarterly chart is in an uptrend with room to go higher. The monthly chart after 2 smaller blue bars is vulnerable to a drop yet still holding a rising support line. Therefore the bullish version is more likely for 2013 Q1. Even if it does not happen in a purely bullish fashion, I expect a decent blue bar for the quarterly chart on close. I am thinking 1500 minimum and chance 1550-75 (ie test of 2007 high)."Results
1. First paragraph: January stronger than called but high for quarter on 3/28 so idea of continued bullishness was right.
2. Second paragraph: Not bad. January did remain above the daily 50MA (purple line below), but did not exceed 2007 price highs by quarter end. But the index did make a new closing high on 3/28 and was just 6 points shy of price high target.
3. Third paragraph: Not really applicable since preferred bullish scenario played out.
Week by week:
A. Up with high on 1/4, check.
B. Pullback low 1/8 then up, check.
C. Stronger than written but pullback low 1/15, 1 day off.
D. Up into 1/22-23 and then some, fine.
E. 1/31 low as called; 2/4 low was a bit lower by 2 points so 1/31 didn't hold 10 trading days but not bad.
F. 2/4 week did finish blue despite the first drop.
G. 2/11 week marked mixed signals and result was a tight range sideways bar, check.
H. Red bar, off although market did drop 2/20.
I. 2/25-26 high arrived on 2/26, and 3/1 was higher low; mixed.
J. 3/4 week up although market stronger than written.
K. 3/11 week some up.
L. Up overall with 3/19 pullback low, check.
M. Up with 3/28 high, check.
Many weekly summaries quite correct, most pretty good, a couple not quite right.
4. Fourth paragraph: Not right as January was the biggest gain, February small blue bar and March decent blue bar.
5. Fifth paragraph: Preferred bullish with "1500 minimum and chance 1550-1575." Quarter 1 closed at 1569 so pretty much nailed it here.
6. Key high and low review. 3 key lows were listed for Q1:
1. 1/16-17 key low, subsequently changed to 1/15-16 turned out pullback low.
2. 1/30-31 key low, turned out 1/31 pullback low although 2/4 was 2 points lower.
3. 3/1 key low, subsequently changed to 2/28-3/4; 2/26 was it although 3/1 did form next higher low, pretty close.
4. I didn't list a key high because didn't think any one date would hold as a high for 10 trading days, but updates called for noticeable drop in the second half of February with a possible key high on 2/15 (1 day off from 2/19 high). So these were all pretty close to important turns.
Since starting to write these quarterly maps in 2012 Q3 I have gotten the basic move for each. See for yourself here.
This one for 2013 Q1 was bullish and with SPX near 1425 said 1500 minimum and chance 1550-75 which was a score. The main thing off was that January was the biggest advance but in terms of where the lows came in it was quite correct. Soon I will do a Weekly View review as well.