I may not be the highest profile guy around but I do get lots of email. People want me to see their work, some hoping their predictions catch lightning in a bottle. For the most part I look at them because I would like to find an assistant I can trust. As a matter of course, I don’t follow or read any other writer’s work on a regular basis as I don’t want to be influenced by anyone.
But lately I’ve seen a theme emerging from numerous sources, even from some of my clients. There’s a groundswell of people out there who are trying to figure out how the market is going to crash. You won’t believe to what lengths some of these people are willing to go as they curve fit the pattern we have now into the 1987 or other similar type patterns. I suppose anything is possible but so few out there have a clue about what really has to materialize. First of all there needs to be a panic and as we go through history there never has been a crash so soon after a prior crash. I think it’s fair to say the market crashed in 2008. As I look at crashes in the 20th century, 1907, 1929 and 1987 comes to mind. Certainly we have to include 2000-01 in the mix for technology but after that happened, it took the market 6-7 years to recalibrate the bear. It also took 5 years to recalibrate the 1930-32 events. The 1929-32 event was unique as the crash materialized in the A wave while the C wave was a relentless event to complete the pattern. Isn’t that a sterilized way of characterizing The Great Depression?
So the chances of having a panic so soon after the prior one are statistically a small probability. Long time followers of my work know a very rare event happened at the epicenter of the financial storm of 2008. The Lehman BK materialized 233 trading days off the Dow/SPX top of 2007 and the TARP vote materialized 233 days off the tech top at the end of October 2007. The worst part of the bear commenced the very next day. We’ve experienced all kinds of time windows throughout history and very few of them have led to a crash. So few as to render them statistically insignificant. Most of them lead to meaningful events that don’t necessarily have to be crash. While we are on the subject of the 233 day window, it almost went unnoticed that the recent low on February 5 came in 233 days off the SPX March bottom of a year ago. If there is any reason to rule against a crash, this may be the best one. We are going up presently as a result of the cycle inverting and the market respecting that window.
That being said, March offers another very interesting time window.
On Monday, March 15, the markets will hit 610 trading days off the bear market top of October 2007. These 610 symmetries tend to be very interesting because they can extend out to day 618 so we’ll have an extremely long time window stretching into the following week. Even more interesting is the fact the NASDAQ topped 14 trading days later at the end of October so we get to do this time window all over again at the end of the month. The period from the middle of March to the middle of April may end up being the most pivotal period of the year. On the weekly scale, we’ll be at 55 weeks off the bottom in the last week of the month.
Immediately I started wondering when the next Feb meeting is scheduled. Wouldn’t you know it, the next time they meet to discuss interest rates is March 16.
The past two weeks must have given bears some indigestion. First of all we had the event at the close of the market a week ago Thursday when Mr. Ben announced a change in the wind concerning the discount rate and markets promptly dropped only to recover by the next morning. Markets had technical reasons to drop being so close to a 61% retracement of the move off the high from January but they held on. Once again just last Thursday, we had another Thursday reversal. What is it about Thursdays? Markets dropped big on the open but were flat by the end of the day. That’s two selling events that were negated. Perhaps if bears did less talking and forecasting and more actual selling they’d get what they are hoping for. While I am looking for a retest of the March 2009 bottom at some point be it this year or five years from now, there has been no technical evidence of a market wanting to swoon in the latest sequence.
When we look at the Dollar, here we finally have a chart that is breaking median support for the first time since January and quite possibly since the turn in November, while the inverse relationship is melting, its still there. Now it appears the greenback wants to correct lower some more and it also looks like copper is ready to go at least a little higher. If copper and the greenback are going in opposite directions favorable to copper, this would not be bearish for the stock market in the near term. If you look at the banks real seriously, they are holding support and finally when you look at biotech, the BTK is still making new highs.
So how could anyone realistically expect a crash to materialize in these conditions? While I only use news events to support my technicals, even the word out of Greece is favorable as it appears Europe will get their act together in time to save the Acropolis.
The bottom line is markets have made two serious attempts to go down and couldn’t do it. There, I said it again. We all know that on a day where the Dow can be down 160 points in the first hour it could easily be down 300-500 by the end of the day if it wanted to.
If you are tired of extreme bullish or bearish agendas, perhaps you should try a subscription to one of our newsletters. We have a unique combination of timing and cycle work combined with median support and resistance lines. Others claim their time windows but Lucas Wave International is documented as identifying the 2007 turn six months ahead of time, which was before anyone else in the industry. And we’ve been doing it for a long time.
We don’t editorialize a bias into the charts. While no one is correct 100% of the time we call it like it is, whatever it is. It’s all available to you at www.lucaswaveinternational.com.