Saturday, October 30, 2010

November 2010

When did the market bottom?
The conventional date is March 6, 2009 @ 666.79. However November 21, 2007 was the previous low swing. November was the date that the Chicago P/C Equity ratios peaked. (10-98, 21e-.92,50- 0.85). The low of 741.02 on November 21st was the swing point that various technical divergences were based upon and the last cycle low preceding the market reversal. November 21, 2008 to March 6, 2009 is 105 days or 15 weeks.
  • The initial square spans the 105 days between the lows--from November 21st a matrix of squares are generated.
  • The subsequent action in the market appears to be guided by the 1x1, 2x1, 3x1 & 4x1 arrays originating from November 21st. The markets oscillated around the fan lines defining both rate of increase and the price levels of important support and resistance.
  • The cycles traveled between 2x1 and 3x1 until the April 26, 2009 high.
  • Since the bottoms of July 1st and August 27th the market has been contained between the 3x1 and 4x1 lines.
  • The vertical cycle lines are near significant pivots being formed during the advance. (4 highs 1 Low)
The most intriguing aspect of this chart is that the market is approaching the termination of the 7th cycle. The purple circle indicates the 7th cycle sphere of influence. Like the currency chart posted earlier the number 7 has been dominant in the factoring of the cycles. 7 x 15 = 105
  • The cycle termination date is November 26th
  • The support arc is approaching the horizontal axis of the 7th square.
The behavior of the market during the previous 6 cycles suggests that the ending of the 7th cycle may usher in an acceleration of trend--or perhaps--an termination of the influence of the 2008-2009 low.
The market may be a raging bull about to burst to the upside--or--as my pal J.A. Wow says: "A bug looking for a windshield."

As November progresses traders should be on the lookout for other cycle dates that may have increasing influence on the action in the markets. The strength of the fan lines will be an excellent tool to determine if the market is changing 'frequency'.

The chart can be opened in a separate window by clicking the image.


The calendar below is used to estimate when 'energy' may influence market behavior. It is composed of 3 types of cyclical data:
  • Golden Ratio Harmonics
  • Geometric Harmonics
  • Planetary Harmonics
November's calendar suggests that Monday mornings will interesting as far as volatility is concerned. November 8th, 15th, 18-22nd & November 29-30th are the highest 'energized' dates.

The calendar can be opened in a separate window by clicking the image.

Thursday, October 28, 2010

European Geometry

The last comment demonstrated the 7 week or 49 day (7x7) cycle in the USDX. The following is a graph of the EURO with a 84 day or 12 week cycle. 7 X 12 = 84

The graph is divided into grids based upon the initial 84 day cycle from the April 22, 2008 high of 160.20 and the subsequent high of 160.19 on July 15, 2008. This initial cycle is the highlighted yellow square in the top left corner.
  • Squaring out 7 cycles hits the projected Dec 01 2009 high: actual high is November 25, 2009. Note that time is 7 squares over and price is one square down. (Burgundy Square)
  • Prices broke down when the EURO broke under the 30 degree vector emanating from the center of the 7 square circle (The red circle at 3.5 x 3.5)
  • Extending the initial double top square 12 cycles projects a potential pivot on November 2, 2009 (# 11) and January 25, 2011 (#12)
  • The arc of the 12 cycle square (Green Square) is currently acting as resistance to the EURO
  • The 30 degree vector coming from the center of the 12 square cycle is just below current the current price level much like the 30 degree vector acted with the 7 square cycle. The 30 degree vector will be at approximately 140 at the termination of the 12 square cycle on January 25th.
  • Note how many times the price of the Euro hit the grid intersections during the 7 and 12 square cycle. The vertical grid lines offered support and resistance and the vertical grids were at or near pivot points. The Euro is currently at (GRID 11-3) Previous hits were at 2-2, 3-2, 4-3, 6-2, 7-1, 8-3, and 10-3.
BOTH THE EURO AND USDX ARE AT IMPORTANT CYCLE JUNCTURES. THE PRICE ACTION IN THE NEXT WEEK WILL LIKELY DETERMINE THE TREND INTO LATE JANUARY OF 2011.

Lucky Sevens for the US $

The U.S. Dollar Index is shown below.
The low following the pivotal November 25 2009 low occurred on Jan 13 2010--a period of 49 calendar days.
If a 49 day square is projected from the November 25 low and interesting phenomena occurs in this time period.

  • The initial period is 49 which is equal to seven weeks: 7 X 7
  • If the initial square is projected out by seven cycles 49 cycle squares make up the larger orange square.
  • The seventh square marks both the time and price of the recent low.
  • A move above the recent high of 78.36 would be a bullish development for the $.




The chart below shows the 45 degree and 30 degree radii coming from the center of the square made up of the 7 smaller squares shown above. Note how the 30* lines has acted as support and resistance during the period of the 7X7 cycle.

Tuesday, October 26, 2010

An Interesting Week Ahead.

The chart below depicts a 57 day cycle time-price square. The market is in a position to move away from this price level in a volatile manner. Watch VIX.

Tuesday, October 19, 2010

Market Geometry and October 28-29 2010.

A TREMENDOUS AMOUNT OF MONEY CAN BE MADE IN THE NEXT TWO WEEKS.

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.
OPEN IN SEPARATE WINDOW

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.

Tuesday, October 12, 2010

Copper: Square of Nine

Several Markets are in extreme technical conditions. Monitor the U.S. Dollar and metals markets for clues about the S&P. A spike into the 1170s and subsequent reversal would be dramatic for the S&P but if the other markets fade here, the S&P will likely follow.
The Copper chart is resonating with time as can be seen in the Square of Nine chart below.

Copper is 180 degrees from the low and the current position of Mars. (October 7-12 Scorpio 26-28 --226-228*)



Friday, October 8, 2010

Market Geometry and Copper.

Here is an excellent example of market geometry. Copper produced a bearish engulfing line today at the 540 degree level. (360 + 180)

The markets--Copper, Gold, Silver and S&P should be interesting between now and October 21-22nd.

Thursday, October 7, 2010

Silver

On September 30th I commented: "Silver--which is really over-bought--could spike to the $23-$23.50 level while Gold makes a run at 1320." Over the last few days Gold smashed through 1320 with virtually no resistance--extending its rally from July 28th into extreme over bought territory.
Silver (Dec) was as high as $23.42 Wednesday evening reaching the level mentioned on the September 30th comment. Using the continuous contract shown in the chart below,there are some interesting relationships at this price and time in the silver market.

Squaring price to time
  • Using the February 5th low of 14.68, if that price level is converted to time, using a 10: 1 scale, 146 days (360 degrees) from February 5th is July 1st--one day before the July 2nd low of 17.57. If the time-price relationship is progressed another 240 degrees, 600 degrees (360+240) the resulting date is October 7th.
  • Using the May 13th high of 19.81, 198 days from May 13th is November 27th--a date to put in your trading calendar. However if the time-price is progressed only 270 degrees we get May 13 + (198*.75) = October 8th.
  • 240 days from the Feb 5th low is October 3rd.
  • 144 days (12*12) from May 13th is October 4th
  • Although this is somewhat unconventional if the low of 14.68 (10:1) is added from the high date of May 13 we arrive at October 6th.
  • If 72 days is added to the July 28th low of 17.35, the result is October 8th
Gann Square of Nine
  • 180 degrees up from the 14.68 low is 23.34 (Sqrt of 14.68 + 1)2
  • 120 degrees up from the July 2 low of 17.57 is 23.60
  • 72 degrees up from the 19.81 high is 23.53. (Note how 72 and 144 is a common thread in the calculations.
  • 120 degrees up from the July 28th low of 17.35--which is exactly 60 degrees up from the 14.68 low-- is 23.35
There is a cluster of price and time harmonics this week for silver at 23.34-23.60--watch for signs of a reversal. A short term correction could be really interesting.

click to enlarge

Tuesday, October 5, 2010

Copper: As Does Copper So Does Equities.

Some say that Copper and Equity prices travel through time in tandem, applying the syllogism:
  1. Copper does well during economic periods of growth and decline during recessions.
  2. Equities perform well during economic expansion and decline during recessions
  3. Therefore, Copper and Equity price levels are highly correlated.
If this is indeed the case, both markets are warning of a potential trend change--which in turn--if the syllogism is correct--portend the near term future of the nascent recovery.
The chart below is of the Comex Copper Futures EOD Index. As well as indicating an over-bought technical condition there is a very powerful geometric cluster this week.
The chart below is of the Comex High Grade Copper December contract.
  • Squaring the price range from the April 5th high and the June 7th low of 89.55 projects a 480 degree (360+120) time harmonic on October 4, 2010
  • Squaring Price from the April 5th high of 366.55 projects a 180 degree time-price square harmonic for October 5, 2010
  • April 5 + 180 degrees (days) = October 2nd.
  • June 7 + 120 degrees (days) = October 5th.
    Monitoring the price action in the Copper pits this week may reflect the activity in the Equity markets.

    Sunday, October 3, 2010

    Why is October 4-8th So Important?

    S&P 500: Time Price Harmony
    The S&P 500 has oscillated around the 1141 harmonic level since the Sept 21-24th Energy Dates. Although it appears to have broken free of this area on several occasions the market has been pulled back to this price harmonic repeatedly. During this period the bullish camp--which includes the invariably bullish financial media-- has become increasing confident while the bearish camp's conviction has waned. Why has the market vibrated aimlessly during this 2 week period? A possible explanation for this activity is that price was not balanced with time. Squaring time and price using several different approaches suggests that this tug-o-war may end this week.
    • The first part of the table below shows time cycles derived from squaring significant dates by the natural sequence of numbers. The date is established then the square of progressive numbers is added to that date. For example the date January 1 2000 is increased by the square of 2 (4) which produces the date January 5th. Then the square of 3 (9) is added producing January 10th and so on. Using significant dates such as the March 25, 2000 high and adding the square of 62 (3844) produces October 3 2010. Using the main highs and lows since 2000 and adding squares to those dates creates a cluster the week of October 3-9th
    • Squaring the prices on the dates to obtain harmonic levels to these highs and lows produces a price cluster between 1135-1143. Three of this levels are derived from perfect 360 degree harmonics ( 1080 & 1440) while one date is 60 degrees off the perfect square. 1080 (360*3) is the 3rd octave of 360 while 1440 (360*4) is the 4th octave. The S&P is hovering just above these levels.
    • Using the natural squares in a Gann Square of Nine of recent highs and lows also form clusters near the present price level. In addition to the 1138-1150 area, the important 1105-1110 area and the 1172-1177 area are clustered as well.
    • If prices break below the 1135 level, a decline to the 1107 level is likely. If support does not hold at the 1107 area, much lower prices can be expected. Conversely, if prices break to the upside, the market will attack the 1175 area quickly--likely reaching 1175 on or before October 12th.
    click to enlarge
    Squaring of Range
    Potential pivots can also be determined using the range of market swings.
    • For example, the range of the August 9th high and July 1st low is 119.15. (1129.24-1010.90). Converting price to time from the low of July 1st projects July 1 + 119.15 = August 29. ( 2 days off the latest low pivot. Projecting the 119.15 time-price square from the August 9th high projects Aug 9 + 119.15 = October 7th.
    • Another example is if price is projected forward 180 degrees (208.90/2 = 104.45) from the high of the April 26-July 1 range of 208.90 (1219.80-1010.90) April 26 + 104.45 = August 8, 2010--one day before the August 9th high. August 8th fell on a Sunday. Projecting 180 degrees from the low date of July 1st a projection of October 13th is derived which is close to the squares of price to time shown below.

    The current chart of the Cash S&P strongly suggests that the market is getting weary-- momentum is waning while the internal structure of the recent advance is deteriorating. W.D. Gann equated price and time in several ways in order to pinpoint price levels at important turning points. One method that is quite effective is the squaring of price to time in order to ascertain a potential turning point date. The table at the bottom of the chart below details the cluster of Price squares the week of October 3-8th--particularly October 4th and 5th.
    • If the April 26th high of 1219.80 is converted to time using a 10:1 scale (10 S&P points = 1 day), a 360 degree progression (1219.80/10 = 121.98) hits the August 25th low. (April 26 + 121.98 days) Progressing price another 120 degrees to 480 degrees results in October 5th being a potential turning point.
    • Progressing the August 9th high 180 degrees ( (1129.24/10)/2) equals October 4th
    • Progressing the August 27th low 135 degrees (90+45) results in October 4th being a potential turning point from recent low.
    • A very interesting harmonic occurs if the May 6th low of 1065.79 is used. Progressing the price by 510 degrees (360+150) results in October 3rd being a potential time-price harmonic. If you add 150 days to May 6th you get October 3rd as well. Price and time are exactly one octave apart. Anyone who studies musical theory can appreciate the harmonic implications of this.
    • The June 21st and July 1st pivots produce a cluster on October 10-12th. If the market was to rally to 1175 it could meet 'time resistance' at this point. The October 10-11 date is a static pivot for the stock market much like the July 16-21st time frame and the December 2-8th. Many important turns in the stock market have occurred in this time widow. (the 2002 low, the 2007 high as well as many others over the years.)

    GOLD
    Gold has reached the anticipated 1318-1320 resistance area. Prices should encounter resistance here and turn down testing support levels below current prices.

    U.S. Dollar
    The US Dollar is becoming drastically oversold and there seems to be no one that has any confidence that the US$ will appreciate in value--A PERFECT ENVIRONMENT FOR A MASSIVE RALLY. Stay tuned for bullish technical developments in this market. A time price analysis will be done on the UDSX over the next few days.

    Friday, October 1, 2010

    S&P SELL READY

    • A few more analysts that I respect a great deal capitulated to the bull today. This is not to say that they will not rejoin the bear camp but it is a sign that a top is near.
    • The chart below shows several Fibonacci relationships that suggest that a pivot point is due in this time frame.
    • As you know I have been constantly harping about the importance of 1141--as well as 1107. I also mentioned the power of the Sept 21st-24th time frame. Since that period the market has tried to break away from the 1141 area but to no avail. If you take the low since the 21st (1122.79 on the 23rd) and the high (1157.16 on the 30th)--the median price is 1139.97 and the Sept 30th close was 1141.20. The market is resonating around 1141. While a break to the upside Gann harmonic of 1175 is possible it is beginning to look like the market my turn down from this very important harmonic level.
    • RSI and MACD are suggesting that the market is quite vulnerable to a decline at this point in time
    • If the S&P breaks below the 1122.79 low established on the 23rd, prices are likely to continue to decline. If the market does decline further the 1107 level becomes VERY important. If the 'Great September Rally' is not over 1107 should be strong support and a further rally to the 1175 harmonic is possible. A close below 1107 would greatly decrease the probability of 1175 being seen anytime in the near future.
    Energy Dates for the S&P 500 are
    • October 4-5 ******
    • October 8th *******
    • October 11-12 **
    • October 21-23 ******
    • October 28-30 ***
    * indicates the relative energy of each period.


    The McClellan Oscillator is looking weak--diverging from the apparent market strength of the last few sessions.


    CBOE Put/Call ratios--although not at the extremes seen in January and April of 2010 are in slightly bearish territory. This ratio combined with the high bullish sentiment numbers does not bode well for a continued rally at this point.



    Risk reward parameters are well defined for establishing positions in this time frame.