OK, so now we have financial regulation. I haven’t digested the details yet but this appears to be a politically massaged bill that doesn’t really address what needs to be addressed. A little birdie told me banks will easily find ways around the new rules to keep on doing business as usual. Somewhere along the line banks decided there was more money to be made trading derivatives than doing what made this country great, which is the financing of the next bull market.
That’s probably why we aren’t seeing a secular bull market anytime soon. All I’m going to say about the latest Rolling Stone article is if what they write is true about the BP catastrophe; this President might be looking for a new job in about two and a half years. We hear so much from the right and tea party. We certainly have the administration defending themselves but did any of you notice how quiet Hillary Clinton is? You don’t hear a peep out of this woman. I’ll leave it to your imagination as to why she is so quiet.
Why is all of this so important? My charts show trouble down the road if not in the near term. This trouble can conceivably turn into Presidential politics. This Europe stuff is getting old. I’m looking for trouble in the fall and you know the other side of the aisle intends to send a nuclear barrage at this administration and some of it is bound to stick, especially if it’s true. In terms of the banks, the perception now is with regulation in place it will set a floor on the market. Please don’t ride that slope of hope.
But while we are talking about the banks, the BKX did put in a very nice reading on Thursday which was my advance warning to a better Friday. If you are looking for any floor on the market, how about an average of .055 points per hour off the top to the low on June 8th? Now we have an average of .1125 points per hour at an 89 hour low to low cycle off that June 8th pivot. That .1125 is off the high on Monday which is a very good geometric reading as 11.25 is half of 22.5 which is half of 45, a very important Gann number. How is that for a floor on the market?
The chart shows you the great readings on the hourly chart. What it also shows you is an attempt to get back into the bullish channel after falling away from it. What our clients have seen in case after case is after a pattern falls out of a bullish channel it makes a serious attempt to get back on the horse. But just as it is about to get rolling again, it fails to get in the zone and the entire direction changes. It’s a fairly reliable pattern. If we didn’t have good geometrics at these lows, the higher probability would be a collapse in prices. However in this case we do have good geometrics so the higher probability is to start the week flat. It may go sideways here and make another attempt to get back in the zone from a higher level and still fail.
Last week I was fairly confident the market would turn down no later than Tuesday even as I was writing the update on Sunday night the Futures as well as Asian markets looked fairly good. The open on Monday was also good but sure enough the direction turned around and sentiment got thick really quick. Prices were already heading south on Monday. As you know last Monday was also the Summer Solstice which the great Gann taught us is one of the more important market days of the year since it has a 90 degree relationship to March 21st. For those of you who are not initiated, the whole market year is not set in motion from January 1st. The most important market day of the year is March 21st and many turns have perfect relationships based on that date, whether the price action hits a high or low. For example, everyone knows May 6th as Flash Thursday or one of the most pivotal days since the top. But how many of you realized that May 6 is 45 degrees removed from March 21st? By degrees I mean solar degrees. Simply put, the earth travels around the sun in a 360 degree circle and it takes 365 calendar days to do it. Therefore each calendar day is worth .986 degrees and the move from March 21 to May 6 is roughly 45.36 degrees. For those of you who are familiar with Gann’s work, this is one way of tracking calendar days. For the rest of us who are new to this method of tracking calendar days, be advised this is how it works. June 21st, last Monday was another one of those important calendar timing days and the markets reversed like clockwork.
But in terms of the BKX, prices did not find a high at perfect geometry. In fact the lows are stronger than the highs. Therefore I believe we’ve dodged another bullet. In case you haven’t noticed, all the major indices came back to down to test important channel lines from the bull market of the past year again for the 3rd time in the past 6 weeks. This is getting a little old, isn’t it?
But we are coming to the end of the month which is also the end of the quarter. This usually is a bullish time of the year. Trading could be light as we head into the July 4th holiday. By the way, that means we’ll also have a light column next week as I’ll be on holiday as well. The week also starts with the EUR-USD above the ‘less terrible’ mid line which has caused all the problems the past 2 months. My stance for the week is neutral to slightly bullish. Overall, this is the end of June and if you remember I came here to start the month stating I expected June to be better than May. Gee, it didn’t take a genius to figure that out but once the horse is out of the barn you never really know. So we are likely to end the quarter without a serious breakdown on the chart, without the economy in free fall as a result of a European meltdown and a US Dollar that still has not broken through the 3rd rail of the 90 level. In other words, the republic is still in one piece, the recovery is moving ahead at a snail’s pace and the oil is still flowing in the Gulf.
Jeff Greenblatt is the author of Breakthrough Strategies For Predicting Any Market, editor of the Fibonacci Forecaster, director of Lucas Wave International, LLC. and a private trader for the past eight years.
Lucas Wave International (https://www.lucaswaveinternational.com) provides forecasts of financial markets via the Fibonacci Forecaster and other reports. The company provides coaching/seminars to teach traders around the world about this cutting edge methodology.