Each month, Stan Harley publishes The Harley Market Letter, a newsletter that provides advanced technical analysis of stocks, bonds, and precious metals. Below, you'll find a few key highlights from the Harley Market Letter for November.
Is Now the Time for a Cyclical Market High?
Two long term cycles are clustering in the mid-November time frame which, when taken together, present very compelling evidence for a pending high of import. The first – a 79.6 month cycle – has coincided with every major high since January 1973. The second, a cycle averaging about 185.5 weeks – the half-span harmonic of the 79.6 month cycle – is due in the mid-November 2014 time period as well. When taken together, the technical underpinnings are cautioning that investors would be well-advised to prepare for what could be a major market top in the making.
Final Drive to Major High?
My 39.8 / 79.6 TD cyclical work has us heading higher for the next 5-6 trading day (TDs) for the pending 39.8 / 79.6 TD cycle high. Forward projections from the last several crests in this cyclical series appear to cluster about the November 14/17, 2014 time period. Over the last year, the 79.6 TD duplex function has waxed and waned about the 0.618/0.382 ratio – meaning two subcycles of 49.2 and 30.4 TDs on average. However, my work suggests this time we are likely to see an even 39.8/39.8 TD pair – pointing to November 14/17th for the next high – and very possibly, a major bull market top.
The daily chart of the S&P depicts what I am calling a blow-off top. Note how every daily bar (except one) has seen its intraday low higher than the intra day low of the prior day. That is unprecedented.
An S&P 500 Blow-Off Top
The daily chart of the S&P depicts what I am calling a blow-off top. Note how every daily bar (except one) has seen its intraday low higher than the intra day low of the prior day. That is unprecedented.
79.6 Month Cycles
In recent months I have updated the chart of the 79.6 month cycle below both to stress its importance to long-term readers and to introduce it to new readers. Note how every major high on the chart can be defined by this 79.6 month cycle. Other than the 1.236 expansion between January 1973 and April 1981, this cycle has been quite regular in its beat. At soon to be 85 months from the prior peak, this cycle is on track to mark its next crest. It is my view that the next occurrence in this 79.6 month high-to-high rhythm should also coincide with the final bull market top.
Mid-November High
Long-term readers are well-acquainted with my theories regarding trading cycles and their underlying mathematics. The 39.8 / 79.6 trading day (TD) cycle series governs the patterns on the charts of the stock market. As can be seen, the 39.8 TD cycle undergoes various degrees of expansion and contraction but the long-term average of the data falls right at 39.8 TDs. The variance in its duplex function of 79.6 TDs is, however, much less pronounced. The vast majority of the time the duplex function tends to lie within the band of 64.4 – 104.2 trading days.
Treasury Bonds
Bond prices are undergoing a bounce here. “Bounce” may or may not be the correct term depending on the magnitude of the move upward. The 30 year bond chart appears somewhat more-robust than the TLT – an ETF tracking stock for the bonds. I plan to hold bearish – recognizing we may be underwater for short spell – but keeping my eye on the exit should the pending strength become more impulsive than reactive.
Precious Metals
NEUTRAL Outlook Issued
Although I was expecting the 1,125 octave to get tagged, metals price would appear to have made the low I was anticipating. How long this bounce will last I have not yet calculated – but four-six weeks is probably likely.
Want to learn more from acclaimed market analyst Stan Harley? Visit his site and subscribe to the full Harley Market Letter. You can also learn more from Stan this Friday, Nov. 21st, where he will be hosting a workshop called Exploiting Market Cycles – The Key to Successful Investing at The International Traders Expo in Las Vegas.
