Still without power and internet despite brief restoration midnight Saturday, but here’s my analysis based on what I can get on my iPhone
Earlier this month we noted the key squares down from the all time SPX 6100 Dec 6 high
Let’s recap
90 degrees down is 6022
180 degrees down is the infamous 5945
270 degrees down is 5868
360 degrees down is 5791
The SPX undercut 5791 on the open, Monday, then tested this 360 degree decline region twice before wiping out a 50 point plus deficit and closing green.
In so doing the SPX left a reversal signal called a Gillian I created that does a good job of identifying
Solid buy setups in ongoing bull markets.
It is a gap down to a new 60 day low with a close at/near session highs.
Obviously Monday satisfied that criteria.
However if the trend has turned down which I believe
Is the case then a Gilligan will produce a false positive with a day or a week or so of countertrend rally during which time a bearish minus One/Plus Two sell setup will be generated.
This occurs when the 3 Day Chart is pointing down as is currently the case with 3 consecutive lower daily lows turning the 3 Day Chart down.
For the Minus One part of the
Strategy.
2 consecutive higher daily highs will satisfy the Plus Two part of the strategy.
They need not be higher CLOSES. Just higher intraday highs.
If Tuesday’s high is above Mondays high which is my expectation then trade above
Tuesdays high on Wednesday will put the SPX in the ~1/+2 sell position
(The opposite pattern defines a Plus One/Minus Two buy setup)
If we get a two day rally the door is open to 5868 region
Which is 3 squares of 90 degrees or 270 degrees down from the all time high
IF, If 5868 is Exceeded and sticks theoretically a rally to the pivot du jour at 5945 is possible.
Why?
Two reasons
1) that is 180 degrees down from high and roughly 180 degrees up from the. Low for the move which was Monday… so far.
2) the 50 day moving average is at 5952 and falling.
the SPX may want to kiss it goodbye. That is typical behavior.
Look at the charts I sent yesterday from 2007 and 1987 and 2022.
Remember also that the biggest rallies play out in the midst of bear markets.
But they are short lived.. especially the One day bursts of excitement.
The Buy the Dip mentality dies hard.
Especially after 15 years of advancing markets.
For example the largest one day rally to that point in time
Occurred in early October 1987 just a few weeks before
An historic crash.
Indeed that early October gust
Spent the last ounce of strength the market could muster.
It rolled over and started to utterly collapse by Oct 13th 1987.
I bring this up for two reasons :
1) I’ve been following two analogs as you know.
The first is the break of double bottoms below the 50 day moving average examples of which we showed yesterday.
That analogue indicated another down day yesterday which was my expectation.
That said one day does not an analogue destroy
2) the second analogue is the sequence of the Gann Panic Zone.
This Panic widow opens 49 calendar days from high
49 days from Dec 6 is a week from this Friday
Jan 24.
But the interim rally peak is around the 40th c day from high which is this Wednesday.
A rally into Wednesday produces a potentially perfected Minus One/plus Two sell signal as described above.
As was the case in 1987 the early October rally that year had the vast majority believing the market was loaded lock, stock and barrel for the next up leg.
A sharp rally today and possibly Wednesday will have the bulls chanting buy buy buy like Cramer wearing a toga leading capitalist Hare Krishna’s
In a dance outside Broad and Wall.
Full stop.
According to the Gann Panic Window a waterfall starts slowly then all at once —- beginning Thursday and accelerating next week.
If the pattern is at play
The point of recognition will be a failure below Mondays
“Reversal Bar”
That is a Come To Jesus Moment for the buy the dippers.
Interestingly 180 days/degrees from the July 2024 peak and subsequent Fkash Crash ties to Wednesday.
In turn, the July peak was 90 days from the April low
In sum short term time harmonics indicate a pivot high following Mondays reversal that satisfied a 360 degree decline from the all time high.
In hindsight the Principle of Squares did a good job of calling Mondays low.
Regrettably I am not fully in gear
Be that as it may if we rally. To 5860 region or even 5950 region the ensuing leg down
Will dwarf what we have seen
So far
I believe a crash wave is rolling in and 10% off the High is 5500 which is not Even a crash.
That is a bull market correction,
The strong likelihood is that we see a drop to where the blow off started in early August at 5119…the start of the SPX Rising Wedge.
Interestingly 50% of the 4 month range from the August low to the December all time high is 5610.
This is just below the key cube down if 540 degrees at 5640.
5640 -50 is the summer highs.
Breakage below prior resistance that fails to act as new support opens the door wide open to 5198.
This is two price cycles of 540 degrees or a key 1080 degrees … two cubes ,
down from 6100, the all time high.
Just to give you an idea. When the Wheels come off as was the case In the 2008 panic the SPX dropped
Two of these 1080 degree cycles or 2160 degrees
In 6 months or 180 days / degrees from May 2008 to November 2008.
This is the same as 6 full 360 degrees decrements.
In other words if 360 degrees is a cycle or circle then 6 of these 360 degree moves is a Master Cube or Master Move.
Voodoo? Not really.
The move from the 2002 low to the 2007 top is precisely 360 x 6 or 2160 degrees.
The crash from May 2008 to November 2008 was 360 x 6 or 2160 degrees.
I just wanted to put that out there in case a super cycle top has been seen.
Tomorrows update will walk through what that projection
Points to.
I will be sending out some long/short ideas as well for Tuesday.
Thank you for your continued support and wishes.
All the best,
Jeff
P.S. I’ve posted an abbreviated nightly report for use today.