However, when I go around the horn, look at the condition of the Greenback as well as the bond market, I think we can settle into a trading range choppy type of market through this week and next week. We have a couple of massive time windows triggering around November 18 so we are now within the margin of error. Here’s why I think we are land locked. The bond market seems to have hit an important floor as the low came in with an important square of 9 reading. In Gannspeak, a 90dg reading is just about as strong as a pivot can be. It rallied last week and peaked out at 61.2dg where it pulled back. If you don’t totally understand this, basically what we are doing is converting the movement from point A to point B in terms of degrees in a circle. When we get important geometric or golden spiral readings, markets change direction. Here we are stuck between 2 good readings. As we know, the stock market tends to act inversely to bonds. Until this condition gets worked out, we could be stuck in a range.
Click chart to enlarge
Why are we spending so much time on the psychological side of this market? Institutional buying is very different from short covering and if we are to be in a bear phase we need to be able to gauge the conviction of the bears. If they were really convicted, they wouldn’t care about every twist and turn coming out of Europe. They’d find a different excuse to sell it every day and on some days it would sell without an excuse. That’s what bear markets are made of. If this sort of thing continues, eventually the bears are totally going to give up and we’ll have a tremendous rally. We are coming to the seasonal aspect due to Christmas anyway.
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.