Finally, I have to share with you that I’m get challenged by ultra bears who think the market is too high. There is a good level of disbelief that the market could be this high. I know I’ve made this point before but it’s worth repeating since I might be the only guy around that has brought you this calculation in the February 2011 issue of this magazine in my feature on Gann. Because of the symmetry dating back to the Dow 1987 crash leg we had a range of 1108. From the high in 87 to the low for the NDX on November 21, 2008 is 1108 weeks. The bottom in the NASDAQ in 2002 is also 1108. This is a 21 year cycle point. They don’t come along very often and I’ve been talking this symmetry since about the summer of 2009 when I figured it out. It helps explain in terms of the cycles why the crash and financial crisis hit so hard, it was generational.
You already knew that but what most people fail to realize to this day how that symmetry influences financial markets. I think we are in the very early stages of a new secular cycle. Does that mean we have instant prosperity? The country did not prosper after the 1932 bottom until they had a World War and the troops came home. I believe 1949 is generally recognized at the beginning of the great prosperity for the 50’s and 60’s. The market bottomed also around the turn of 1975 but we didn’t get prosperity again until 1982. But I don’t think anyone else has a better explanation of why the markets have been up the way they have now for 3+ years running. Nor do they have an explanation of why bears were ultimately frustrated when so many were expecting new lows last year.
We have our challenges but I’m not surprised the market is where it is. It has shown amazing resiliency. I’ll leave you with this. We are in March, the month with the Gann Master Time window at the equinox which is the most important cycle change point of the year. If we pullback this week we may find a low in that window. If not we may have a case sell in March and go away.
Click chart to enlarge