Equity index technicals offer a unique trading opportunity

It’s the season again. I know what you’re thinking. It’s time for the election, finally. Its time for the Fed to pump money into the system.What else is new?

Once Halloween hits, it’s even time to start thinking about the holiday shopping season. If the leaves are turning back east, it’s finally time for me to shut off the air conditioning in my desert cave.

It is the season for all of these things. However, it’s also time window season. November has the possibility of a very important time window. As you know, we’ve been talking about the 161 week window off the bear market top back in 2007.We are into the 160th week right now. Since the NASDAQ topped 3 weeks later, we’ll be in this time window to one degree or another throughout the whole month of November. November is also important because we have several anniversaries. First of all is the November 21, 2008 NDX turn. That turn is important for the following reason:

When we take the Dow top in 1987 of 2746 down to the crash low of 1638 we have a range of 1108 points. That’s important because time squared the range at the November 21st 2008 NDX bottom as it was 1108 weeks off the Dow top in 1987. I’m sure it’s not lost on some of you the NASDAQ bottom in 2002 is 1108. It bewitched me for a long time but if you really want to know the reason 1108 is so important perhaps you should take a subscription to one of my cutting edge newsletters. It’s taken me a couple of years to figure it out but when I get mad and put the pedal to the medal breakthroughs happen.

We have the 161 week window working, but that’s not the only one. We are also coming to 610 calendar days off the March 2009 bottom. As you know we had bottoms on the 6th and 9th. From March 6, 2009, 610 days falls out on November 6. You can do the math. The window extends through the 9th.Add in the plus or minus factor and we get the 5th-10th. But we also have other days in this sequence such as 615 and 618. If we consider the 1108 number which seems to show up, subscriber Sherry reminded me that we are coming to 1108 calendar days off the NASDAQ October 31, 2007 top on the 12th of November.I have excellent subscribers. Think it has anything to do with the teacher?

Since all of this is just a week out it would seem we are too close to get anything but a high in this sequence.However, if we look to the buy the rumor sell the fact context of what sentiment is right now, if we do start to sell off in the next couple of days its conceivable we can get an inversion low later in the month. Sellers have had numerous opportunities to show up in the sequence from Labor Day to here but have failed to do so for more than a couple of days at a time. We’ve seen Gann type square relationships violated. Two weeks ago the market violated an SPX that was 157.6 weeks off its 1576 top in 2007 while last week the NDX took out the range of 1108 off its 1018 bottom. These relationships are being negated for one of 2 reasons. It’s either setting up for a bigger top in this big time window or we are in a new bull market.

Seasonally, the bears just missed their very best opportunity of the year because September and October are traditionally the worst months of the year. It’s statistically true but in terms of the Gann calendar there have been so many major October pivots there is no doubt the most important turning points of the year happen in October. So they missed that sequence. November is really the last point where we can have bearish activity because the probability is December will be favorable to the markets. Things are not set in stone and we could have an outlier year but if we come through November unscathed I have to consider the possibility we can rally straight through to next March.

We haven’t said much about the banks because they’ve been quiet. As long as they are not pointed south the market can rally. In case you’ve noticed, the BKX is not even close to challenging April highs even though the NDX is already higher and the Dow came within ticks of taking its April high out. The fact that banks are lagging can’t be good and unless they were to catch up if the rally continued there will come a day when the piper will have to be paid. But the fact they are lagging given all of the foreclosure leaks we do have the potential for a nasty spill even if it’s just a shake out this month.

Then we have the US Dollar which found a low after a move of 13.70 in 137 days. What we have yet to determine is whether the Dollar wants to correct sideways or spike straight up. But the Dollar has made important turns the past couple of years in November. The Dollar is going to have decent potential as long as a ceiling remains on the EUR-USD and we’ve highlighted the condition in this space over the past couple of weeks. The early news on Sunday night as I wrote this is the Greenback finally started advancing against the Yen.

So here’s where we stand overall. Markets have advanced for 2 solid months which are usually the weakest 2 months out of the year. I think they are trying to tell us something. They are telling me they are getting tired but don’t want to do much more than give us a mean shake of the trees.

Because of Gann price and time relationships they’ve hit a level around last week’s high that should be very tough to break through. That being said, the time windows over the next couple of weeks present sellers another opportunity to take markets down. If they do, it is likely to be short and intense given the time of year and proximity to Christmas. Unless the next sequence gives us any real technical damage I’d look for higher markets into the first quarter of next year. Bears could be getting an opportunity here but bulls down the road if they can be patient.

At Lucas Wave International, we are starting work on something new. While it’s not ready yet, we are working on a mobile web site and will be offering useful information, ideas and promotions via your Smartphone. More information will be forthcoming soon.

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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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