The following is an excerpt from my column right here 2 weeks ago:
“So I’m looking all around and the only really important part of the market we count on for leadership that could fall back is the SOX. So here’s my concern. As we come back from the holiday we enter the 610-18 window for the NASDAQ as that topped 3 weeks later than the Dow did in October 2007. I won’t say the big windows have been a dud up to this point because we did catch an important pivot in the long bond and without the benefit of hindsight won’t know how important is for several years. But I think it might be really important.
So we move into the stretch drive for the important cycles at this time of the year. Long term followers of my work will remember back to 2007 where we had the big windows from the 2002 and 2004 bottoms spread out on 4 key dates from the day after Labor Day right to October 12. Each of the dates gave us a smaller degree turn until the bull market ultimately ended on October 11 as we wrapped up week 262. Why was October 12 targeted? It was the start of a Mercury retrograde period. As we know Merriman has done great timing work on Mercury retro periods and we know that statistically up to the 8th trading day that condition can chew up the prevailing trend. Our day 618 off the NASDAQ top is April 15th. Isn’t that poetic? Anyway, the Mercury period commences on April 18. This is not a prediction but I can only hope the market doesn’t follow historic form and give us yet another big time reversal on a key time window just as the window closes and opens a new door for the Mercury period. But with markets making new highs, you certainly can not rule it out.”
Some of you have seen my Futures Panel Discussion with Dan Collins last year either in Pasadena or New York (which was a live webcast) where we debated the merits of the technicals v. the fundamentals. It has always been and always will be my contention that when big time windows line up, the news event somehow seems to manifest. I’ve been witness to this fascinating phenomenon for the past 10 years. It never seems to fail.
So here we are, calculations on NASDAQ trading day 618 actually on Friday but the window opened on Thursday off the top with the stars aligning perfectly. I had absolutely no idea what might materialize on Friday and I told my subscriber base everything was lining up in a way we haven’t seen in a long time and they should be ready for just about anything. There are a lot of calculations here so I’ll share a couple of them. From the bottom, the NDX is up exactly 100%. From 1018.86 to 2040.49 to be exactly precise its 100.27%. From the March low of 1040 it’s up 1000 points. Well, 999.97 points if you want to split hairs. From that same March bottom we are up 3.60 points a day (3.597 to be exact). I can go on an on because there’s more but you get the point. I even have a nice reading for the BKX, but we’ll get to that in a minute.
Now we get to the news story of the day. We won’t get into the specifics of the story here but we know its fraud and Goldman Sachs. Those of you who think this is an isolated case should get the April 15th edition of Rolling Stone magazine where Matt Taibbi exposes another Wall Street scandal, this time with JP Morgan, “How Wall Street Ripped Off Main Street.” Why I have to read this good piece of investigative journalism in a place like Rolling Stone magazine it beyond me, but that’s another story.
I think this is the tip of the iceberg.
The reactions to Friday’s turn of events range from no big deal to this is the beginning of the big bad bear’s return which is the start of a new leg that won’t complete until 2016. I wonder if the perma bear is right, how exactly does it benefit us to know the market will be down for the next 6 years?
The fact this calculation is tied to the beginning of the bear market is serious enough to get your attention. The fact the news story is tied to the banks at a point where we have calculations tied to the bear should get your attention even more. We’ve also had a month long time window where at no time until Thursday night did we have anything remotely close to what is lining up right here. As you know I’ve categorized most of this window (Dow 610/618 and NASDAQ 610) as a dud. The bear has been in hibernation for a long time, almost long enough for us to think he was gone. However I told you last week, lest I spoke too soon, the bear had one more opportunity to make a ripple on the lake.
How all of this impacts the long term cycles nobody knows. For my part, I expect the March bottom to be retested at some point. I have no idea whether that happens in a year or 10 years but there is historical precedent from the 30’s and 70’s the bear market bottom will be tested. In the case of the Great Depression it took 10 years. What I can tell you is we do have an evening star in the BKX, SPX, $COMPQ and Dow. It comes at the exact right day.
When we consider the technical condition on the BKX has an evening star with a decent reading it has the potential to lead to the downside. Remember I told you nothing seriously bad will happen to the market unless the banks lead down? Now you need to stay in gear and watch those banks every single day.
We’ve had a lot of amateur technicians in cyberspace calling for markets to crash when the market looked just fine. It was just that level of disbelief that propelled markets higher. Since Lucas Wave International does possess one of the most cutting edge timing methodologies in the business, we don’t get excited until there is something to get excited about. I also told you the correct technical take was to be bullish but at some point everyone comes to the conclusion the market can only keep going higher. That is the kind of sentiment which suggests a move is maturing then we have to wait for the time window to kick in so we can get the change in direction. But you need to understand the significance of calculations like these and understand they do form the basis for important turns. The only bullish thing I have to tell you at this time is if somehow the market can shake all of this off it can go a lot higher. Right not that is looking like the real lower probability.
In support of everything is a Greenback that had a decent reading last week to propel at least a technical bounce. But for once this is a week where the Dollar is not our focus and equity market cycles are maturing and everything should be dominated by these cycles. I’m sure I’ll have plenty to say about the Dollar in upcoming columns.
If it is ever going to happen, now is the time for it. So I’m not going to make bold predictions that mean nothing in the bigger scheme of things. What I am going to tell you is you need to be ready for anything, even a return to the bear market. While that kind of talk is premature, this is one of the few times talk like that is warranted as I technically can’t rule it out.
Click chart to enlarge
I’ve been bringing important market windows to your attention now for the last 8 years. I was the first person in the entire industry to bring the 2007 calculations to your attention 6 months ahead of time in my own updates. It’s what we do best. The proof in the pudding is the work I did for this magazine in the August 2007 edition. I covered that bigger window just like I have with this one right here.
It’s vitally important to understand these are the calculations that drive market behavior and the news. NOT THE OTHER WAY AROUND. Many traders give back profits from one trend because they don’t understand the significance of how time windows really work to change conditions. If you want to better understand market mechanics, you can get more information at www.lucaswaveinternational.com.