I remain resolute in my view that a market top is imminent – although pinning it down to the day has certainly been a challenging endeavor. It’s an iterative process…
There is the possibility we might have as much as another four trading days of modest buoyancy for a number of reasons: First, the 79.6 trading day duplex function I have written about so much can, at times, expand by a factor of 1.236 – to 98.4 trading days. If that were to happen, that would carry this push higher into about December 11th – Thursday of next week. I could easily see that happening. And there’s more…
On the left you'll see my chart of the S&P 500 surrounding the October 11, 2007 time period – the last major market peak (also associated with the prior crest in the 79.6 month cycle series). I note some interesting – and perhaps similar – developments. The time period between the 19-Jul-07H and the 11-Oct-07H spanned a period of 59 trading days. A similar 59 TD time count from the 19-Sep-14H would carry into 11-Dec-14. A 39 TD low-high count from the 16-Aug-07L into the 11-Oct-07H when added to the 15-Oct-14L would equate to 10-Dec-2014. If history were to repeat…that would suggest we could expect a high in the 10-12 Dec 2014 time period – which lines up nicely with the 98.4 TD count described above.
DJIA / GE Indicator
A fellow newsletter writer, friend, and colleague, Larry Katz (now deceased), brought to my attention some 20 years ago an interesting phenomenon. He and I headed up a couple of market analysis groups in the Los Angeles area and often we shared a few adult beverages – and market views. One of his precepts involved comparing the market action in the DJIA with that of the stock of General Electric Co. (GE) – a major DJIA component. As a market rally matures with the DJIA pushing to new highs, he noted, GE very frequently diverges by making a lower high. It is usually the chart of GE that proves right – leading to a subsequent market decline. Note the present pattern. My colleague, Tom McClellan has studied this pattern as well and he, too, has written extensively about it.
Languishing here without much fanfare. Longer term I remain a bond bull – but in the intermediate term the pattern would suggest further weakness into the late first quarter of next year.
Continued sloppy price action underway in the metals complex. Price is jockeying back-and-forth across the 50 day moving average. Although I have a near-term bias to the upside, putting on any longs here could be excessively high risk in my judgment – however, the 1,250 price octave and change is still possible in the weeks ahead.
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