For many months now I have been anticipating the arrival of the
June 9th-10th time frame. There are a multitude of very long-term
fractals indicating that the time period +/- 2/3 days is likely to
be a significant "turn window". Of course the big issue with any
turn window, even if you know when it may arrive, is whether it is
likely to mark a high or low. That will never be known with any
certainty until you get relatively close to the window and see the
direction heading into the turn. Additionally, the intrinsic
"value" of the turn window is usually directly correlated to the
extent to which the market is stretched away from the mean when
heading into it.
Getting more to the point. I have no question whatsoever that many
large players were not only fully aware of the impending arrival of
the turn window but also heavily positioned with the expectation
that the market would continue lower for a few more days into that
turn window before reversing. As is virtually always the case with
any “easy” trade, the trade got very crowded, which effectively
caused it either to arrive early, or to “invert” shortly before it
arrived, punishing those who were leaning too heavily into the
trade…I strongly believe that is what is contributed to today’s
outsized rally.
Most importantly, that leaves us with a nice “tell”. Either the
turn window arrived early and a significant bottom is now in place,
or the “window” is still going to exert its influence and instead
of marking a significant bottom as most were expecting, it is about
to mark the next short term top. Potentially, assuming the market
is in a larger corrective pattern, that short term top could
actually be a significant top (a larger degree wave (2) or (B) high
as Steve has mentioned) that starts the next wave down.
Moral of the story, be very wary if the market continues to rally
for the next few days especially if the rally lasts until the later
part of the turn window (Monday/Tuesday). Should that occur, there
is a very high probability of very sharp pullback that will at a
minimum correct a large part of the rally, but could potentially be
the start of another leg lower. Either way the reaction during that
pullback will be watched by every large player on the street as a
gauge for the rest of the year. If the pullback is contained, then
the window hit early and the lows for year are likely in…if the
rally is sharp into early next week and the resulting pullback is
not contained, then the window likely marked a Wave (2) or (B) high
and new lows should follow rather quickly. ( I realize this may
seem elementary to more advanced traders, but the logic and the
process that allows us to anticipate these moves before they occur
should be very useful to less experienced traders.)
Finally, to give readers an idea of the potential significance of
the turn window keep in mind the following (this is just one of
many fractals in play)…On March 24, 2000 the SnP topped making an
all time high at 1553…Over seven years later the SnP topped again
marking an all time high on October 11th 2007…that process took
2757 days. A 1.618 Fibonacci extension of that time cycle is 4461
days.
4461 days from the all time SNP high on October 11th 2007 is…June
10th 2012!
FWIW i thought i would add to this topic as i enjoy using cycles
as well. i use cycles as one of my TA tools and see them as that,
they add to the analysis, and at times are more useful than others.
early in my education i thought they may be the holy grail, now i
know that does not exist.
the easy way to describe then for the unitiated is as support
and resistance lines only in time instead of price. so i treat them
exactly as you would a suppport line or a trend line. if
there is a particular cycle date coming up, you watch, it may have
an effect or price may crash right through it. Just like a trend
line if previous dates in a particular cycle have had an effect the
stronger it is, (the more touches on a trendline, the more
important). There are many different brands of cycles, i like Gann
ones, but funnily enough the more i learn of them the more they all
have in common with each other. Gann and elliot/fibonacci are so
similar sometimes you think they were all in the same coffee shop
one morning. hurst has variations but comes back to the same thing,
i see matt and steve write about "symmetry" in the market, and that
chart of matt's with the big circle, all the same thing really.
but anyway, i am sitting and watching several cycles at present.
there was a minor gann one for monday 4th, next fractal july 3rd,
but the really interesting one is a 5 year cycle next due early
october, chart attached (i hope). the chart is as far back as i
could get with any detail but this 5 year cycle has been marking
highs and lows since at least 1982 including some major ones. so on
the basis that it has been hitting 100% for at least 30 years i am
keen to see what october brings.
in my opinion mondays low was not "it" for the year
Posted by mdschapiro on 6th of Jun 2012 at 10:34 pm
Adding to your thinking: I follow cycles and the window for a
trading cycle bottom was May 21-June 8, and in my mind that is the
only reason we rallied, we found the bottom during that window and
here we go. The intermediate cycle already bottomed and topped in
a left translated way and is next expected to bottom in
the Aug/Sep time frame, also the seasonal cycle (about 1 year in
duration) is also suppossed to bottom around that time frame. From
the point of view of cycles the present trading cycle is very
likely to fail to make a new high and also top in a left translated
manner, if that happens, then we should be looking at a steep
decline into the intermediate and seasonal cycles. If Bernanke is
going to make QE3, is very likely he will wait until these cycles
bottom to do it to make sure he takes credit for the bounce that
will come anyway in the Sep/Nov timeframe just in time for the
USA election. The election in Greece may well be the excuse
everybody will use for this coming trading cycle to top.
Everybody is still very bullish while economic conditions
continue to deteriorate, Europe in recesion, South America just hit
the wall, and so forth, and usually the stock indices are the last
ones to show the reality of the situation.
Looking at GDX during the big fall of 2008, it shows a virulent
2 week rally after which it dropped like a rock, and now I see
a 2 week rally into resistance, and everybody is thinking we are
going to the moon. The fact that Gold just made a 9 year cycle top
is never going to be digested by the gold bugs out there.
The types of generic cycles you are discussing are not really
comparable to the precise Fibonacci turn windows I was discussing.
While there is no question that there are many big funds out
there that model the types of loose theoretical cycles you are
discussing into their macro models...They are not the ones out
there accelerating the markets on individual Fibonacci dates, (Or
TD sequence dates etc), and are providing the bread and
butter movements that most success intraday/swing traders here
are following.
Posted by mdschapiro on 7th of Jun 2012 at 12:26 am
You are absolutely right, there are many young cannons out there
trying to outsmart each other, however knowing which way gravity
pulls may be helpful for the little guy, and in the end they can
not make water flow uphill.
One other item to consider in the tool box...
Posted by chartboy on 6th of Jun 2012 at 10:15 pm
For many months now I have been anticipating the arrival of the June 9th-10th time frame. There are a multitude of very long-term fractals indicating that the time period +/- 2/3 days is likely to be a significant "turn window". Of course the big issue with any turn window, even if you know when it may arrive, is whether it is likely to mark a high or low. That will never be known with any certainty until you get relatively close to the window and see the direction heading into the turn. Additionally, the intrinsic "value" of the turn window is usually directly correlated to the extent to which the market is stretched away from the mean when heading into it.
Getting more to the point. I have no question whatsoever that many large players were not only fully aware of the impending arrival of the turn window but also heavily positioned with the expectation that the market would continue lower for a few more days into that turn window before reversing. As is virtually always the case with any “easy” trade, the trade got very crowded, which effectively caused it either to arrive early, or to “invert” shortly before it arrived, punishing those who were leaning too heavily into the trade…I strongly believe that is what is contributed to today’s outsized rally.
Most importantly, that leaves us with a nice “tell”. Either the turn window arrived early and a significant bottom is now in place, or the “window” is still going to exert its influence and instead of marking a significant bottom as most were expecting, it is about to mark the next short term top. Potentially, assuming the market is in a larger corrective pattern, that short term top could actually be a significant top (a larger degree wave (2) or (B) high as Steve has mentioned) that starts the next wave down.
Moral of the story, be very wary if the market continues to rally for the next few days especially if the rally lasts until the later part of the turn window (Monday/Tuesday). Should that occur, there is a very high probability of very sharp pullback that will at a minimum correct a large part of the rally, but could potentially be the start of another leg lower. Either way the reaction during that pullback will be watched by every large player on the street as a gauge for the rest of the year. If the pullback is contained, then the window hit early and the lows for year are likely in…if the rally is sharp into early next week and the resulting pullback is not contained, then the window likely marked a Wave (2) or (B) high and new lows should follow rather quickly. ( I realize this may seem elementary to more advanced traders, but the logic and the process that allows us to anticipate these moves before they occur should be very useful to less experienced traders.)
Finally, to give readers an idea of the potential significance of the turn window keep in mind the following (this is just one of many fractals in play)…On March 24, 2000 the SnP topped making an all time high at 1553…Over seven years later the SnP topped again marking an all time high on October 11th 2007…that process took 2757 days. A 1.618 Fibonacci extension of that time cycle is 4461 days.
4461 days from the all time SNP high on October 11th 2007 is…June 10th 2012!
great stuff tks for sharing
Posted by drmelillo on 7th of Jun 2012 at 07:31 am
great stuff tks for sharing
Thanks for sharing your thoughts, chartboy; excellent post.
Posted by lessarda on 7th of Jun 2012 at 02:00 am
fruit box additions
Posted by morgan8 on 7th of Jun 2012 at 04:49 am
FWIW i thought i would add to this topic as i enjoy using cycles as well. i use cycles as one of my TA tools and see them as that, they add to the analysis, and at times are more useful than others. early in my education i thought they may be the holy grail, now i know that does not exist.
the easy way to describe then for the unitiated is as support and resistance lines only in time instead of price. so i treat them exactly as you would a suppport line or a trend line. if there is a particular cycle date coming up, you watch, it may have an effect or price may crash right through it. Just like a trend line if previous dates in a particular cycle have had an effect the stronger it is, (the more touches on a trendline, the more important). There are many different brands of cycles, i like Gann ones, but funnily enough the more i learn of them the more they all have in common with each other. Gann and elliot/fibonacci are so similar sometimes you think they were all in the same coffee shop one morning. hurst has variations but comes back to the same thing, i see matt and steve write about "symmetry" in the market, and that chart of matt's with the big circle, all the same thing really.
but anyway, i am sitting and watching several cycles at present. there was a minor gann one for monday 4th, next fractal july 3rd, but the really interesting one is a 5 year cycle next due early october, chart attached (i hope). the chart is as far back as i could get with any detail but this 5 year cycle has been marking highs and lows since at least 1982 including some major ones. so on the basis that it has been hitting 100% for at least 30 years i am keen to see what october brings.
in my opinion mondays low was not "it" for the year
agree
Posted by law666 on 7th of Jun 2012 at 08:51 am
my cycles are in both time and price however squaring price and adj for error allows
you to see how that quadratic equation works
in the depression treasuries were also used as currency in Germany
not much different today in europe really ...getting close
Adding to your thinking: I
Posted by mdschapiro on 6th of Jun 2012 at 10:34 pm
Adding to your thinking: I follow cycles and the window for a trading cycle bottom was May 21-June 8, and in my mind that is the only reason we rallied, we found the bottom during that window and here we go. The intermediate cycle already bottomed and topped in a left translated way and is next expected to bottom in the Aug/Sep time frame, also the seasonal cycle (about 1 year in duration) is also suppossed to bottom around that time frame. From the point of view of cycles the present trading cycle is very likely to fail to make a new high and also top in a left translated manner, if that happens, then we should be looking at a steep decline into the intermediate and seasonal cycles. If Bernanke is going to make QE3, is very likely he will wait until these cycles bottom to do it to make sure he takes credit for the bounce that will come anyway in the Sep/Nov timeframe just in time for the USA election. The election in Greece may well be the excuse everybody will use for this coming trading cycle to top.
Everybody is still very bullish while economic conditions continue to deteriorate, Europe in recesion, South America just hit the wall, and so forth, and usually the stock indices are the last ones to show the reality of the situation.
Looking at GDX during the big fall of 2008, it shows a virulent 2 week rally after which it dropped like a rock, and now I see a 2 week rally into resistance, and everybody is thinking we are going to the moon. The fact that Gold just made a 9 year cycle top is never going to be digested by the gold bugs out there.
So everybody be careful out there.
MDS...I think you are mixing
Posted by chartboy on 6th of Jun 2012 at 11:17 pm
MDS...I think you are mixing apples and oranges.
The types of generic cycles you are discussing are not really comparable to the precise Fibonacci turn windows I was discussing. While there is no question that there are many big funds out there that model the types of loose theoretical cycles you are discussing into their macro models...They are not the ones out there accelerating the markets on individual Fibonacci dates, (Or TD sequence dates etc), and are providing the bread and butter movements that most success intraday/swing traders here are following.
You are absolutely right, there
Posted by mdschapiro on 7th of Jun 2012 at 12:26 am
You are absolutely right, there are many young cannons out there trying to outsmart each other, however knowing which way gravity pulls may be helpful for the little guy, and in the end they can not make water flow uphill.
last line
Posted by chartboy on 6th of Jun 2012 at 10:26 pm
Last line should have read.... 4461 days from the March 24th 2000 high is…June 10th 2012! (1.618 ext from the start of the cycle)
BTW...the chart below shows the date of the last significant "turn window" from this cycle....