Stock Markets Time Cycle 08-06-11 - A Major Rally Is Coming Right Now

I commence with my gratitude to The Ultimate Knower

Get Ready to buy as a major rally is on its way. However, beware of the out of the money options holding over the next day, as you shall find that even though market or underlying moved in your favor, however, options did not and in some instances, may even loose value, Why! keep on reading...

As I stated last week that I erred in trying to finding a bottom a few days earlier than I should have. You see, usually, I have a cardinal rule, i.e., to totally ignore other analyses and forecasting by other analysts, as it impairs my ability to see independently  However, recently on July 7 (please see my posts until the July 7, I was looking for a massive decline based upon my independent view of the markets), someone sent me emails, with someone's analyses, but more importantly pointing out the historic data, more specifically 60 years time cycle, asking me if I was wrong being so bearish. I always watch long term time cycles and scale them down to minor time cycles to time the market trend changes. The history always intrigues me, so this email got me and I was lead to read the analyses and history of 60 years time cycle. Which clouded my view and judgement "Partly" and that is the reason, that I was looking for shorter decline and looking for the bottom earlier last week, than I should have been. Please look at my posts around the dates of July, e.g, this one  and this one. I even gave you the turn date of 07/08, which was "the line in the sand" and then July 25th date was given in later posts. I even had correct turn dates given in the posts dated later.
Nevertheless, I am back to my "Very Independent" stance, as I have been most of the time.

Stock Market analysis/forecast 8-6-11
 VIX Chart

Let's look at the current outlook of the markets. Stock Markets have been dropping severely and rapidly and fell harder during the last week. However, this decline came darting into the time cycle for a change, thus stock markets, "around the world" will experience a MASSIVE rally.

Stock Market Forecast 8-6-11
Time/Price Cycles Squaring

Let's me show you how: Markets have dropped 45 days from 05/02 high into June 16 low (both were predicted, my displeased readers). and then market rallied into the next swing high (lower double top) of 07/07, (also predicted as turn in the market by me). Since then markets have dropped 30 calendar days, into the 08/05. Both declines are in exact same vector price. The price decline from May high to June low and Price drop from July high to Friday 08/05 low, has also a relationship of 1:1.5. So time and price cycles are squaring. Moreover, markets have completed the price drop, as foreseen by my this post.

The recent decline was on the anticipation of rumors of worst to expect from these rating agencies and finally cat came out of the bag. Now the investors would be relieved as they had visioned the worst and it did not occur. Investors were expecting couple of notches lower downgrade than to AA+. Especially, now S&P has downgrade the US but removed her from the negative watch and with two other rating agencies maintaining the AAA rating of US (which I, personally think is absurd). US rating downgraded by the S&P would have more effect on US politics than on the markets. Markets are looking more towards the Europe for futures moves, than looking at the US for "Now". Dow Jones minimum target is to retest the 12,000 resistance and for S&P-500 index 1,262 to 1,274.

Oh yes, another word of advice: when VIX rises, so does the premium of options, when VIX drops, so does the premium of options. Therefore, intra-day for just less than 2 hours trading of options is advised not an inter-days. You might find yourself surprised that market has gone up but not the options.
Support of S&P-500 at 1,160-1,168 must not be violated and it must not close on daily basis below this level to keep the reversal of trend to the upside going.