Tuesday, October 19, 2010

Market Geometry and October 28-29 2010.


At the end of September when the Energy Dates were posted: October 21-22 and October 28-30 were listed as Energy Dates.
The following suggests that a significant decline in equity markets is imminent. Along with the volatility in equities, gold, silver, copper and THE U.S. Dollar will also be effected.
This entry will deal only with the potential meltdown in the S&P 500.

Open the chart below in a separate window to make following the comments easier to follow.

There is a 34 week cycle emanating from the March 6, 2009 low. The cycle dates are as follows:
March 6, 2009: LOW
October 30, 2009: actual low Nov 2 2009
June 25, 2010: actual low July 1 2020
February 18, 2011.: ?

The Half cycle is 17 weeks:
July 3, 2009: actual low July 8 2009
February 25, 2010: minor low Feb. 25 2010
October 22, 2010: Imminent. Most likely date OCTOBER 28th-29th

Squares of 34 weeks were put on the chart showing these lows.There are several points that are highlighted that should be taken note of:
  • The PINK 3X2 line coming from the March 6th low held the decline that ended on August 27 2010. This trend line is of the utmost importance since it signifies the uptrend stemming from the March 6th low. For the bullish case to remain intact this trendline should be held.
  • Note how one square up from the March 6 low is in the area of the first resistance coming off the March 6th low.
  • 1/2 a square higher is the 1040 level which has supported prices on November 2nd, February 5th, May 25th and August 27th. The importence of this 540 degree point (360+180) is VERY IMPORTANT--especially since the market rallied with power off that level (1039.70) when the lateral support (540*) intersected the Pink 3X2 uptrend line from March 6th.
  • Study the top half of the upper square. Note how the often mentioned 1107 level represents the top quadrant of the second square which is 630 degrees. The YELLOW diagonal trend-lines depict the minor resistance levels encountered while the market moved between 1040 and 1180.
The next section is very important and should be carefully scrutinized.

The main cycle is 34 weeks--which happens to be a Fibonacci number.

If the 34 week sides of the square is used to create a 34 unit sized equilateral triangle a REMARKABLE relationship becomes evident.

Triangle Numbers.
A triangular number is the number of circles in an equilateral triangle evenly filled with circles: for example to determine the number of evenly spaced circles in a equilateral triangle the following formula can be used.
# of units: (n * (n+1))/2 or (n2 + n)/2 : where n are the number of units of the side of the triangle.
A triangle that is made up of 5 unit sides has:
5 (5+1))/2
(25 + 5)/2 = 15.
A six unit Equilateral triangle has: 36 + 6 /2 = 21

Note that when the triangle number 15 is added to the next triangle number 21 the result is the next natural square : 15 + 21 = 36 = 6 squared

The specific square that we are using is the square of 34.

34 squared = 1156.

35 squared = 1225

When a square is made up of 2 equilateral triangles the number of squares is the addition of the smaller square (34) and the larger square (35)

Using these squares the following number is attained:

if 34 is the smaller aspect of the square.

34*35 / 2 = 595
35*36 / 2 = 630

595 + 630 = 1225

If 34 is the larger aspect of the square the following numbers are attained:

33*34/ 2 = 561
34*35 / 2 = 595
561 + 595 = 1156 Price Harmonic

34 X 35 = 1190

Using these squares and triangles the following numbers become significant:
1156 (September 30th high 1157.16)
1190 (October 18, 2010 high 1185.53)
1225 (April 26 high 1219.80)
These levels represent resistance and support at the current 34 week cycle.

Now comes the interesting aspect of the Squares and Triangles analysis.

When the 34 week squares are used to form 34 unit equilateral triangles something very interesting occurs.
First the math:

  • split the equilateral triangle in half
  • using Pythagorean Theorem the perpendicular is .8666 of the hypotenuse.
  • opposite 2 = hyp2 - adj2
  • opposite 2 = 1156 - 289 = 867
  • opposite - 29.44
If diagonals are extended from the cycle lows (march 6 2009 and November 2 2009) observe where the apex of the equilateral triangle is. THE BLUE Triangles.
  • the apex occurs at the half cycle of 17 weeks
  • HOWEVER, note that the prices hit the apex at those dates. SEE the PINK CIRCLES July 6 2009, October 2 2009, February 2010 and May 25, 2010. On all occasions--whether the triangle is drawn vertical July 2009 and February 2010) or horizontal (October 2009 and May 2010) prices are at the same spot as the apex of the triangle.
  • Also note that prices either crashed into these price time harmonics (July 2009 and October 2009) or accelerated through the time price harmonic (February 2010) or dove into the May 25th panic low of 2010.
  • 29.44 squared equals 866.71: Look where the market was on the first 17 week cycle. At the apex of the equilateral triangle: the low was 869.32 on July 8 2009.
There is another half cycle coming due in this time frame. October 19-November 6th--with the center point being October 28th. A seventeen week cycle is 119 days...one day from the geometric 120 day cycle. The 34 week cycle is 238 days--2 days from the geometric 240 day cycle. 119 days from the July 1 2010 low is October 28th--120 days is October 29th. October 29th 2010 is the 81st (9*9) anniversary of the October 29 2919 crash. Venus is conjunct Earth on October 28th.

This apex point 86.66% of the side of the square can be either drawn up off the lows or down from the top of the squares. As can be seen in the upper left square--the equilateral triangle can also be projected from the high low sides of the square. (upper square of March - November 2009) These areas are highlighted by the light blue ovals on October 28th. There are approximately @ 1135-1140 and 950-960 on October 28th.

The main trend-line (pink diagonal) is at approximately 1084 on October 28th.
The upside down apex of the 34 unit equilateral triangle is at approximately 950 on October 28th: a level where many Elliott aficionados anticipate on S&P to be trading at in the near future.

Click chart below for a clearer biew of the 34 unit equilaterial trinagle apex.

Below are a series of Gann Square projections from the 666.79low and the recent 1039.70 low of August 27, 2010. These levels should be monitored for possible support resistance levels on any impending decline.

Below are some of the geometric cycles that are active over the next 3 weeks. Although a mini-meltdown' could happen at any time, the October 28-29th period looks particularly interesting since this is the exact point that the equilateral triangle has its apex. (Blue triangles pointing up and down)

GOLD, SILVER, COPPER and THE U.S. Dollar have also had significant reversals--more on these later.
If and when 1117.20 is broken on the Dec S&P and 1122.79 Cash the probability of some serious market action will increase significantly. Note that September 23rd is the center of the important Sept 21-24 Energy Period. 1107 S&P Cash remains a level to expect support which is just below the Sept. 23rd low.

Assume that events are going to become unhinged in the near future if 1107 is broken.


Anonymous said...

Again: fascinating! Thank you somuch for sharing this with a hord of anonymous like me. No comment doesn't mean no interest be sure of that: you are in my bookmarks and I read your blog every week. GREAT job! Carl.

Joge said...

If European and Asian markets show some resiliency it is highly unlikely that the market will head south.Nasdaq is bumping right up on the great bear line.The 2484 level was right on.IT also coincided with the black tuesday anniversay.
By the way does the previous swing i.e sp500 209 down swing square with the trading days to date?

Fibocycle said...

The 208.89 pt swing occurred between April 26 and July 1. 210 days from April 26th is November 20th...which is a period that has MANY more cycles culminating. Nov 19-23 is particularly significant. The 104 "1/2 cycle" came due on August 8th--one day before the important August 9th high.
208.89 days from July 1 is January 25th 2011. The 104 day 1/2 cycle came due on October 13th.

The geometry suggest that the S&P will be either at 1140 or 950 at the apex of the equilateral triangle. Tuesday's action does not satisfy this. The S&P stopped yesterday EXACTLY where it should have to keep the Bulls in good spirits.

Anonymous said...

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Billy said...

First of all, I love your blog and it's in my bookmark. But what you write is getting harder and harder for me since I don't know anything about Gann. I am confused =(

Anyways, keep up the good work and I appreciate your effort.

Anonymous said...

if the market went up and you added another row on top and a triangle coming down would put us at about the 1225 mark for the apex of a triangle. Is this a possibility or is there a reason it needs to come down to the apex you show.