Tuesday, September 21, 2010

S&P at Critical Gann and Fibonacci Level: Entering Powerful Energy Date Period.

On Thursday September 9th Gold, the USDX and the S&P all closed at a time-price harmonic which could have been the juncture for a top to be formed. However, a caveat was mentioned as follows:
...when trading a caveat is extremely important in determining trade strategy and position management.
If the 1110 area is not sufficient resistance to extinguish the recent market rally, the S&P could advance further to the 1130-1141 level. This would probably occur between now and the POWERFUL September 21-23 Energy Date period.

We are now at the above mentioned time window and the S&P closed at 1139.78 while spending a portion of the day above the critical 1141 before reversing. Once again time-price harmony has been reached in the S&P--but--this time the market is at a level where the RSI is flirting with 70 (overbought) and the S&P has retraced 61.8% of the April 26th-July 01 decline. The exact 61.8% level is 1140. This is particularly interesting since the 270 degree Gann Square level from the Aug 24th low is at 1140.04. Even Mr Bernanke and his crew of clowns could not manage to get the S&P to close above this harmonic level.
Possible Scenarios
  • The market rolls over here at the anticipated Energy Date and resume the decline that commenced on April 26th--today or tomorrow being the top of a 2 wave and the onset of a 3 wave to the downside. A close below the magical 1107 level would significantly validate this scenario. A close below 1128 would be a weaker--but an important clue that a pivot of some significance is being made.
  • The market could continue its incredible rally. A close above the 1141 level would be a strong indication that this scenario may occur. If this scenario were to unfold the next time-price resonance would likely happen near 1175 on or about September 29-30th. I think that this is the less likely case.
The Next Gann-Fibonacci Point is 1175: 360 degrees from 1041 low and a 78.6% retracement of the APRIL-July range.

A few weeks ago the financial press went 'Gaga' over the 'Hindenburg Omen'--it saturated the press to the point that even mutual fund dealers took notice. Market veterans know that when the news media grab hold of a story or fad, it usually proves to be a dude or non event--or better yet--misinterpreted by the general public. This is not to say that the Hindenburg Omen wont come to pass sometime in the near future--but this rally has extinguished the obsession the 'street' has had with it. (October 5-8th)
Another market indicator that has caught the eye of the talking heads on the financial news networks is the possibility of a DOW THEORY buy signal. This is an indicator that has significant credibility and should not be dismissed--but it has to HAPPEN before any prognostication about the future of the Dow can be made using the theory. The chart below shows the Dow Transports and Industrials: The transport have failed to confirm the Industrials rally to new highs--BUT ARE MIGHTY CLOSE TO DOING SO. Monitor the Transport closely.

On August 30th I mentioned the possibility of a reverse head and shoulders being formed but being that it was being obscured by the media's obsession with the larger conventional head and shoulders calling for a top in the market if Biblical proportions. The chart below also shows this potential pattern. Once again--this should be watched closely.

Obviously, the market is at a critical juncture coincident with a VERY powerful time period for the markets. The next few days are going to be fascinating to watch unfold.



GOLD:
Gold languished during most of the day and was appearing to look like it was starting to head south--even though it was not in an area where it was harmonic with either Gann Squares or Fibonacci ratios. The late day rally brought the metal back to life and is possibly setting things up for a time-price resonance later in the week at $1296 or possibly $1320. If the price were to touch 1296 or 1320 between now and Monday September 26th, a time-price harmonic would be set up for a possible pivot.




U.S. Dollar Index.

The USDX fell out of bed when gold came alive. Although the risk reward looked attractive last week, the market action spoke and erased the potential time-price set-up. This market will continue to be monitored.

U.S. T-Bonds
I have not said much about US T-Bonds since last week. 128.50 still looks like a target for prices.

Analysis on the USDX and T-Bonds will be done next week when things have quieted down around here.

5 comments:

Anonymous said...

U can't be serious about this shit. Get real. For your own good.

Anonymous said...

excellent work as always. I don't think we'll reach 1171 by friday though

Anonymous said...

Thank you for your blog. It's very interesting.

Though I do not play US stocks, I find it very useful. I've been studying Gann/astro for 2 years, but it's not easy. One might ask why 360' for spx = 133,06 (1175,06 - 1041) ? What is price/time squaring ?. Looks like I will have to spend more time on your posts.

Thanks
Robert

Fibocycle said...

re: 1171 by Friday...neither do I..ion fact I think yesterday was the high.

re: 'being serious about this shit: you are more than welcome to click yourself out of the site anytime....perhaps you will get more out of listening to the talking heads on the financial media...good luck with that.

re: Gann squares..email me at mysquigglylines@gmail<--dot--)com

Joge said...

Its good to see the market gravitate towards your target. I think 1174 is in the cards for sure.