Targeting April 6th Time Period for Next 39.8 Trading Day Cycle Low
After experiencing a meteoric rise throughout the month of February, the popular averages have since undergone a modest consolidative structure and, in the process, eroded about half of the February gains. But the uptrend for the benchmark averages remains intact; indeed, the Dow Jones Industrials and S&P 500 indices continue to push ever higher while contained within the pattern boundaries of a series of rising 1 X 1 angular channels.
My target for the next 39.8 trading day (TD) cycle low remains the April 6th time period. April 6th will coincide with 117 trading days from the Oct. 15 2014L (39.8 X 3 = 119.4). It will also mark 27 trading days from the Feb 25, 2015 high. I have previously observed that markets tend to incur high-low and low-high moves that span Fibonacci numbers or their one half counts. One half of Fibonacci 55 = 27.5. And a plethora of 0.382 / 0.618 ratios I have identified on the daily and hourly charts all point to late in the session of trading on April 6th – this coming Monday – with a possible spillover into the early hours of trading on April 7th for my targeted low.
Following this next 39.8 TD cycle low I am expecting in the April 6th time period, I look for the bull market to resume its tower of power advance. However, a cautionary bell may be about to ring: The May 2015 time period contains a panoply of cycles highly suggestive of an important stock market reversal. The bull market is quite mature, and getting very long in the tooth.
The NASDAQ Composite index has pushed from the March 2009 low at 1,250 all the way back up to 5,000 – nearly equaling its former March 2000 high. But despite having rallied back to a major price octave and resistance at a former major high, the NAZ has shown considerable resiliency – each pullback has been met with a new crop of buyers. The technical picture I have under study suggests we have at least another five-six weeks of bull market – at minimum. Should the slope of the advance continue into early-mid May, we should see roughly 5,500 for this index at what could be a major high in May 2015.
The XIV chart below depicts an interesting pattern of highs resonating at 54 TD intervals.
In last month’s issue, I highlighted the mathematics underscoring the root-dervation for the cyclical functions I have found in the financial markets. A portion of the tabular listing is reproduced above. I have placed a red box around the most-common cyclical functions encompassing U(10), U(11), and U(12) – corresponding to Fibonacci numbers 55, 89, and 144 along with their respective cycles and derivatives / multiples. 39.8 / 79.6 trading day cycles appear quite dominant on daily charts for the stock market. 49.2 month cycles – and multiples thereof – appear quite dominant on monthly charts for the stock market.
May 2015 Panoply
13-Sep-1929H + 1,030.38 months = July 2015
13-Dec-1961H + 636.83 months = Jan 2015
09-Aug-1982L + 393.55 months = Jun 2015
09-Dec-1994L + 243.28 months = Mar 2015
10-Oct-2002L + 150.26 months = Apr 2015
11-Oct-2007H + 93.02 months = Jul 2015
Average = May 2015
By analyzing monthly pattern for the Dow Jones Industrial Average over the lst 100 years and using the above tabular listing of cyclical functions I have found a very interesting clustering spanning the January – July 2015 time period: the average equates to May 2015.
This panoply of cycles presents very compelling support for a major stock market high in the May 2015 time period.
My work on the weekly and daily charts has narrowed down the time focus to the May 13, 2015 time period. In this issue and next month’s, I lay out the mathematics for a potential May 13, 2015 major high.
168.6 Trading Day High-High Cycles
Above is a chart of the S&P 500 depicting a cycle I have found to average 168.6 trading days. It's roots are grounded in Fibonacci numerology. It has been quite consistent over the last many years. My regression analysis of the data series points to the May 13, 2015 time period for its next recurrence. I am on high-alert for what could well mark a major stock market peak in this time period.
The New York Composite tried to break-out to the upside from what I have been calling its “symmetrical triangle.” This index – along with the rest of the benchmark indices – has backed off and it may well turn-out that my structural definition for this index should more-accurately be referred to as an ascending triangle rather than a symmetrical triangle. Ascending triangles are characterized by a series of rising bottoms with a horizontal shelf of overhead resistance. Given that the NYA has had difficulty punching through the 10,625 band of resistance that may well be what we have here.
For investors, this discussion of “symmetrical triangles” and “ascending triangles” is more academic than practical. The bottom line is that we really have no technical divergences of import yet to be concerned about. My only concern as yet pertains to a major cyclical clustering in the May 2015 time period.
Since late December 2013, the 30-year U.S. treasury bond has powered higher – reaching just under 172 at the latest peak, and although I remain a long-term bond bull into 2021, I am skeptical we will see a continued push to new highs without first undergoing several more months of consolidative structure slightly lower in-and-around the 145-150 region. Tagging that level would serve as a “retest” of the former highs and a a “springboard” area from which the bond market could mount a new surge to new highs.
On the daily chart, the TLT Exchange Traded Fund (ETF) – a proxy for the 20 year bond (and by extension, the 30 year as well) is now trading sideways. Currently perched just above its 50 day moving average and poised to turn lower, the likelihood of the TLT tagging its 200 day moving average in the coming weeks would appear quite likely.
Although I remain a long-term bear on the metals complex, I see the likelihood of about another three weeks of modest upside pressures. The pattern of highs on the daily chart would suggest we are likely to see a reflex rally high in late April. Ideally, I’d like to see Gold tag the 1,250 level one more time. The XAU fell below recent support at 75 and is struggling to make it back to that level. I suspect 75 for this index may coincide with gold’s next push to 1,250 – a potential re-entry point on the short side.
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