Tuesday, July 6, 2010

Fireworks in July ?

The markets are entering a period of time where several cycles are synchronized in the same phase. Daily, Weekly and Monthly charts are turning down in unison and the threat of a 'air pocket' forming below current levels has become quite significant. The chart below shows the projections based upon the following market formations.
  • Golden Section of the March 2009 Low to April 26 2010 High
  • Fibonacci extension of the decline from April 26 2010 to the May 25th low.
  • Projection from the June 21st high of the ABC structure from April 26th: May 25th: June 21st.

The opening on the 12th or the option expiry on the 16th could be a fireworks display and provide speculators, who possess tungsten spheres, with an opportunity to generate some surreal returns.
Using the time and price harmonics last month proved to be very useful. Now that we are entering the firestorm the same tools may prove invaluable.

If the S&P 500 trades below 997 on Tuesday the mood may quickly change --as Jim Morrison said: "from glad to sadness"


Anonymous said...

Could you be kind to explore possibilities of another rally before falling hard down.
I am thinking that over the long-weekend the US govt and its entities have decided to buy stock futures as very important elections coming in November.
Thanks in advance.

Fibocycle said...

The rally on Tuesday may be all that the markets can muster. While it is possible that the S&P could rally above the 1040 level before making a new low below 1010.91 I think that this scenario is unlikely.
On Wednesday the critical level becomes 992.60.
I firmly believe that the markets are on the edge of an abyss.
When the S&P took out the 1044.50 level (Feb 5th low) the writing was on the wall.