Fibonacci analysis of key indexes

It was one of the more quiet weeks as far as news goes, but make no mistake, markets operated according to perfect precision. Remember I told you they needed to survive the middle of the week to keep the rally going. The reason for that was a key Gann relationship to the top on April 26. Most charts turned right on cue. In fact, the precision involved was uncannily perfect.

To give you an idea we were looking for the 89/90dg move on the 27th and 28th. On the open last Tuesday we had a sequence where we were 621 calendar hours off the July 1st low and 618 trading hours off the June 21st high. Rarely do we see such incredible symmetry and taking it one step further if we were looking for a turn in the daily window there could be no doubt this was where the turn would be in real time.

As far as tech goes we’ve been lower ever since. It set the tone for the week.

As far as news goes, GDP came in at 2.4% which is technically still growth but slowing over the past few quarters. Is anyone really surprised? If you consider what they are doing with the banks, is it any wonder the economy can’t going. In essence what we have here are banks who are encouraged to hold cash reserves to prove they can withstand a financial meltdown. To hold such reverses they are not motivated to lend money to the business community. On the other hand we have business who are unable or unwilling to borrow the money. It’s like they are pushing on a string. I don’t know what it is, but somebody is going to have to break this cycle of negativity in order to get people to feel confident about the future again. Personally, the only way I think this is ever going to happen is when we get a test of the bottom and people see that it holds.

How else will people feel confident about the future again?

That being said, what many people fail to understand is this truth has nothing to do with trading or making profits in this business. Look, the bigger picture is problematic, but one week we are up, the next week we are down. For those of you interested in the longer term, in May we were down, in June we were up and down and in July we were up.

In other words we are starting to live up to the forecast and expectations I had for this summer. Luckily there is only a month to go. I think we can have another up and down month. Last week we hit a nice calculation in relation to the April top. If you don’t know, I think the April 26th high is THE HIGH for this year. That means upside is limited. Last week we had a nice symmetry at the high as discussed. But here’s the problem.

As much as the NQ high came in on incredible symmetry as described, the price and time square ratio reading WAS NOT THERE. If you noticed, by Thursday, high wave candles were sprouting up like weeds all over the place. The Fast Money traders were talking about an incredibly confused market. For once, they were right. It is an incredibly confused market. There’s not much you can do about it but at least you’ll know why.

The problem is the fact the symmetries came in almost perfectly yet we had no price ration to balance it all that. What that means is the turn last week on the hourly symmetry and Gann window was more heavily weighted to time as opposed to price. That can manifest in many ways but the usual bottom line is a change in direction but not a permanent pivot. In this case it manifest as a very confused market.

So we had a good high last Tuesday and by Friday we had another halfway decent low. My Gann calculations call for a decent low and you can see Friday’s action already came off the low. That’s a recipe for a trading range and I think we could stay above Friday’s low and below Tuesday’s high all week. This can last until August 6-7 which is the next important time window and that kicks in a week from now. I think we can have a decent week but only until the August window just described.

Going around the horn, I don’t think the Greenback hits support until it gets near 80. Last week it broke some key support levels it had no business breaking if it was in a bull market. It broke support in 3 different levels. The Chinese SSE refused to drop and now is absolutely out of the danger of a failure in polarity. I still think its time for it to pullback but it’s looking more and more like a chart that has bottomed and wants to go sideways.

With the Dollar going lower its no guarantee that equities will go higher but as long as the Chinese market is gong up the world can take a deep breathe.

Remember last week I told you there was slightly more to the BKX move but it likely would fall short of the Gann calculation from the June 27th pivot. This week it did hit the mid line which was positioned south of our Gann calculation back on the 13th of July near 51. Now I think we can spend time above the July 1st low and below the high on the 13th. The first week of the month should be inconsequential but after August 7 the market could reveal its hand for the month. For now it should stay in the range.

This August turn date is also important as it is in perfect relationship to the top in August 2007 as it is now 145 weeks off the top. Once again we have a marriage of near term and longer timer cycles in a similar way to what we had last week where the hourly cycles confirmed the daily. In this case it’s the daily confirming the weekly. It remains to be seen just what kind of hourly symmetry finally turns these markets for the month of August.

But the bottom line is the deeper we get into the month, the more we are at risk for paint drying days. People go on vacation in August and the markets could spend lots of time wasting time until our more interesting time of year kicks in during September.

Click chart to enlarge.

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.

About the Author
Jeff Greenblatt

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.

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