You have to trust the cycles

December 15, 2014 02:41 AM

For three months I’ve come here talking about cycle work and I have to tell you, I’m just as tired of being a broken record as you are of reading it. But at the end of the day, the Nasdaq topped on Nov. 28, the last trading day of the 3rd month of this big window. The SPX topped on Dec. 5 and that might not mean much to many of us but here’s what I’ve come up with.

Dec. 5 is the 2100 calendar day off the '09 bottom. That might not mean much but nature spared us a perfect storm because on Dec. 4 at 2099 the SPX was building to a high of 2079.47, a mere 20 points off a perfect price and time square. The fact it was close is significant because had it been right on the money I think we would be in really big trouble. The fact that it still topped right on that 2099 window with the price action being so close is something that needs to be studied more closely as it is as important to us in the practical trading world as it is academically in the class room to get a better understanding of how cycles play out.

For the Nasdaq this high comes in at 4810.86 which give us a square root of 69.36 while at the same time the bull has aged exactly 68.69 months to that point.

 

We may have also dodged a bigger bullet because as of yet I haven’t figured out a calculation that squares with the 2002 bottom at 145 months. I also haven’t figured a price and time square off the July 1932 bottom at 988 months. If you want to play around with this yourself we are working off a bottom of 40.56 on July 8, 1932. As an aside this is what I’ve come up with. The square roots of the top and bottom are 134.13 and 6.36. The factor is 127.77. That means the total move is 22, 998dg. While 23,000dg is not so important but on the square of 9 when divided by 360 is 63.88 revolutions, nearly 64 which is 8 squared but 63.88 is close in derivative to the square root of the bottom at 6.36. That is how you figure out whether a calculation has any symmetry to it. We had the first correction into October which didn’t amount to a hill of beans but now there is enough here for it to become significant.

The bottom line is these peaks are aligning with time windows but the more you can tie time to price the more significant the turn will be. The fact the best price and time symmetry only ties to 2009 may be a lucky turn for us because if I can really nail this to 1932 and it’s possible that I have already the more serious 2015 is going to be.

I already think 2015 is going to be serious and we’ll get more into that as the new year unfolds.

But for right now the other lesson and I’m telling you this as much for me as it is for you is the work we are doing sometimes wears our patience very thin and I know there are those of you who think this stuff doesn’t work because you don’t see immediate results. All I can tell you is I’ve been doing this timing work for 15 years and most of the time the windows validate just at the point one gives up on them actually materializing. So the bigger the time window the more it tests our patience.

So our hypothesis of a Santa rally interruption this time of year is working even as it took an extra 3 weeks to get a week like we just had. As you know I’ve been calling for it for at least 3 weeks. But there should be more bullish action the closer we get to Christmas. But what we may have here is a case where longer term highs are already in but we may not realize it until later on.

I have a shorter term calculation for the SOX off the 2010 low which on the square of 9 is very close to a 1618dg move. The SOX has really been hit this week. Briefly, we told you to pay attention to the Greenback and it is holding near term support more or less but it did put in a tweezers topping formation on the weekly time frame. On the intraday it projects sideways. So those of you in commodity trades dependent on the Greenback will likely have to develop a little more patience.

But everyone’s favorite subject is handicapping where oil could turn back up. The long term continuation chart has a perfect storm peak in May 2011 at 114.83. Half of that is 57.41; the current low to the sequence is 56.25 so they are slightly beyond a 50% drop. The 50% number is also important in the world of Gann. Nothing has worked to this point, not even a 61% retracement. But if we are going to be close to 50% it must turn on Monday. If not its back to the drawing board.

I read a New York Post story that says Iran needs the economics of oil to be close to 130 so the further it drops the more flexible Iran will be at the nuclear negotiating table. A possible motivation of the Saudis might not be to only get back at the US to see how we adapt to the changing demand/supply dynamic but also to keep the Iranians off balance. There are many issues heading into 2015 but by far the most important in the long run is keeping the Iranians in check and avoiding a nuclear arms race in the Middle East.

Of course the lower it goes the more dangerous our friends in Venezuela and Russia can be. I told you for a long time the year 2014 was going to be pivotal in some way. It did not disappoint. Coming into 2015 I think there is going to a great shaking. We might have to wait until September or October to find out what it is. I also told you that with all that has been going on with geopolitics, domestic issues highlighted by 60’s style protests and a very unpopular president sooner or later traders were going to get grumpy. What you are seeing here with the major time cycles completing is just the appetizer. But cheer up, this is the holiday and Santa probably has something for traders but it likely is going to be a smaller stocking than usual.

 

 

About the Author

Jeff Greenblatt is the author of Breakthrough Strategies For Predicting Any Market, editor of the Fibonacci Forecaster, director of Lucas Wave International, LLC. and a private trader for the past eight years.