Here’s a chart that has already reached the lower rising channel line and a rupture here could have serious implications. If I’m showing you a lot of charts today for this update, it’s because we have reached the most important stock market week of the entire year. We are coming to 618 days off the October 2011 low at the same time we are hitting the seasonal change point and the Gann Master Timing Date—all by the end of the week. I doubt we have enough time to sell enough to truly hit a bottom by Friday, so I’m starting to think of this market the way I did in 2011 with a first low possible by the seasonal change point.
However, we remember how 2011 turned out. There was a relief rally into May when the perfect storm hit and the oil market collapsed. Depending on how high the VIX can get this week, there’s a chance we could see the end of phase one of this selling by the end of the week. I don’t think 2014 is going to be anywhere close to the performance we had last year.
Part of the reason is the geopolitical situation. I know I’m one of the few stock market guys who is paying seriously close attention to all of the events in the Middle East. This is 2014, and if history is any guide, we are far enough along in the recovery from the financial crisis to be concerned about the geopolitical situation. For those of you who don’t know, the San Francisco earthquake of 1906 precipitated the panic of 1907, and by 1914 (a mere seven years), the world was engaged in WWI. From the crash of 1929, the Japanese were very active early in the 1930s, and Hitler was on the move. On March 7, 1936, has he occupied the Rhineland not even seven years after the crash. We are five years from the bottom but 6.5 years off the 2007 high, so tempers are ripe for this kind of showdown.
I always thought the problem would develop between Israel and Iran.
Do you believe in prophecy? Over the weekend, I had a dream about the passing of Mark Haines. It was a disturbing dream, but I’ve discussed his call for the bottom in 2009 in this space countless times through the years. I believe this dream has something to do with the era of his market call being over. What that could mean is the five-year bull market spawned by his call could be over. I have no technical proof of this other than this massive time cycle that just expired, and only time will tell. All I can tell you is since our big time window hit at the end of February, we’ve seen the Russians move on the Ukraine and a massive jetliner disappear out of the sky.
It seems that what lays in front us is going to be a lot different than where we just came from. Be very careful this week.