A Convergence of Signals

Update Oct 12, Late Night (Midnight, EST)

Above is a 1 minute chart of the SP500 at the end of today’s session. I was concerned last night about the futures market and the look of the waves. They look much better this morning and I can now count 5 waves down in cash and futures.

If it is 5 down, we should bounce from here into a second wave that should turn down at the 62% mark (horizontal line) into a third wave. We could also turn down at the 38% level and complete the 5th wave of a longer first wave down.

However, I have reservations as the DOW appears to have overlapping waves and so will need to test the top again. The Nasdaq also may have some issues with its structure, although it appears to be in a very large triangle, so this wave will likely end up as a three. While the SP500 may to have topped, we still need to be vigilante towards watching the market in general.

I’m not tossing in the “all clear” until I see what happens tomorrow (Wednesday). I’m leaning tonight towards one more set of waves up.

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Update Oct 13 Before the Bell: Futures has a small drop last night and although it’s difficult at the moment to identify 5 waves down, but the wave does look motive and the fact that the ES broke support at the previous fourth suggests this might be it.

Also, NQ and YM did ending diagonals yesterday and ES completed a triangle and a double top.

So let’s see what happens in the first couple of hours. Cash will need to properly top. We’ll see where they open.

But I would be on the alert for a 62% retrace in three waves or a double top here.

Be careful. We still haven’t broken any technical levels, so this could also be a fourth wave and signal we’re going to finish this final wave up. All the cash indices still look like 3’s down so we still could go to a new high … but I don’t think it would be a large new high because of what the future did last night.

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There are quite a few cyclical indictors pointing to a top on October 13.

• a strong cycles analysis (below) that shows a definitive cycles top
• the Puetz TPD crash window focusing on the October 13 new Moon
• the market itself, which appears to be finishing wave 5 of 5 of a regular flat
• the upward movement of gold, which typically suggests a “flight to safety”

If you have any thoughts from a planetary perspective on the October 13 date, please post them in the comments area.

As we approach the top of this correction, I often get asked where the best place to enter is. Here is a brief explanation of what to expect and the safest point at which to enter a short trade after a first wave down.

In today’s post, I’ll run some high-level charts and provide a short term one for the SP500.

First, let’s look at the medium term Elliott Wave pattern which is tracing out and is near the end of the C wave.

Here is the SP500 above. Based upon my scenario of an ABC down wave from last week and an “ending wave” up, here’s what remains of the path. The wavelengths in this final C leg up are textbook.

Wave 3 is 1.6 times the length of wave 1. In the final 5th wave, wave iii is 1.6 times wave 1. If wave v traces out the typical full length (1.6 x wave i), it should top at 2052. I have placed a line at the 62% line, which is another typical stopping point (2031). So, somewhere in between 2031 and 2052, the market should turn down.

I measure the ES top at 2030.

Any flat correction is in a 3-3-5 pattern. In this case, the B wave would have been the ABC wave down from last week. The A wave would be the pattern from Aug 24 up to the high.

In a regular flat correction, “wave B terminates about at the end or about at the level of the beginning of wave A, and wave C terminates a slight bit past the end of wave A.” If we complete a flat that goes to a slight new high, then this would have to be a larger 2nd wave and the downside will be much greater than a 5th wave. For example, the third wave alone would take us down to the low 1600s in the SPX. We would have a 5th wave after that.

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If it Quacks Like a Duck …

We’ve been looking at the large correction from August 24 (7 weeks now) as wave 4. Because of the extreme length of time this correction has taken compared to the time taken for the second wave in the first leg down, I’m inclined to label this wave as a larger degree wave 2. (The second wave of the first leg down only took about a month to correct, whereas this “fourth wave” has taken twice as long. They typically would be of a similar length.)

On top of this, the fourth wave’s guidance is that it retraces 38% of the preceding wave. We have almost retraced 62%, which is a typical wave two retrace level. You’ll find in most of the charts below, I’ve kept a “2 or 4” labelling. If all the indices reach 62%, I would be inclined to label this correction wave 2, which means the drop in wave 3 to come is very much greater that if this correction was wave four.

Let’s look at the overall market to get a sense of where we’re at in the larger time frame.

Above is a 2 day chart of the DOW. I’ve drawn in the up sloping trendline for the final fifth topping wave. What often happens before we take a big plunge, is that the market heads up to “kiss” the trendline one last time before turning and moving in the opposite direction. Based on what I’m seeing in the shorter-term charts (the ABC wave down), this seems like the likely scenario to me. Cycles and history repeat.

If this is the second wave, I have overlain a fibonacci retracement tool to give an indication of our target for the third wave. The third wave down is typically at least 1.6 times the length of the first wave, putting the target at approximately 12,758. Following that would be a 4th wave retrace (38% and then a final 5th wave down).

This is the same chart I included in the previous post, just updated.

The 2 hour chart of the DOW. This is simply an update of my chart this past week, predicting the rise we’ve experienced in the last few days. This correction has almost reached the 62% level (the horizontal line). It should turn down there or slightly above this level.

The SP500 (above) sports a similar configuration.

The Nasdaq above is slightly different. It appears to have completed a second wave, although this leg up could extend to reach the previous spike top at 4960.87. This would change the labelling slightly and make the resulting top wave 2. The outcome will be the same—a turn down into a third wave.

Even the NYSE (above) is stretching itself to make the 62% retracement level (horizontal line).

The Global DOW (GDOW) has retraced up beyond the target in my previously posted count. I’m now expecting it to rally to the 62% line to trace out a 2nd wave before a turn down in a 3rd wave. This would fit with the prognosis in the US markets and reinforce my count there as a second wave retrace.

Gold (GLD) above is starting to take off. On a larger scale, I expect GLD to retrace to the 62% level, which is at about 153.00. It has a long way to go. You can see here that we’ve completed a first wave up in 5 waves, have retraced in an ABC pattern and are entering the 3rd of 3rd wave up (after completing waves 1 and 2 of 3).

Another Ominous Signal

Above is the 4 hour chart for Apple (AAPL). Apple has done 5 waves down and has retraced to the previous 4th wave (not quite 62%, which is the horizontal line). It looks to be completing the second wave of the 5th. If this is the case, the next stop should be $75.00.

All the waves down measure correctly. The 3rd wave is 1.6 x the first, as is the fifth wave.

If this corrective wave is the third wave (alternate), the downside target will be much lower.

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Cycles Analysis

I ran this chart Friday after the market close (Oct 9). I’m showing a cycle top now on Tuesday, Oct. 13, 2015.

This cycles analysis uses Techsignal X from the Foundation for the Study of Cycles. I’m using data going back to 2002 this analysis of SPY (SPX) and displaying a compilation of all the cycles the software has found over that period. You can see how close-fitting it has been in the recent past. The fit with the current wave is quite stunning and therefore, something to pay attention to.

This analysis suggests a top to the current wave on October 13 (starting down on the 14). Oct 13 is also the new moon.

It shows a bottom to this set of waves down at December 7, 2015.

This particular cycle top (Oct 13) is a strong one. I’ve gone a little deeper into what the analysis is telling me on a separate page. Here’s a more in-depth explanation of what this chart is suggesting. 

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The Panic Phase and the TPD (Turning Point Distribution) Principle

The TPD Principle describes a period in time of several weeks in which an array of cycles congregate, including gravitational, geomagnetic, and nuclear. It’s around this time that markets have historically topped. I was asked to include a reference to this in today’s blog post, which I’m happy to do. This principle generally refers to market tops (which we’ve already seen on May 20, 2015), but it’s interesting to note how many astro events we have occurring over the weeks surrounding the upcoming major turn in the market.

In his book, “the Universal Cycle Theory,” Stephen Puetz writes, “The TPD principle involves the eclipse cycle as well. The eclipse cycle normally peaks on the first new moon before a solar eclipse. Following that reversal point, it takes six weeks for sentiment to shift from euphoria to panic. Then on the first full moon after a solar eclipse, a panic-phase begins. A panic phase usually last two weeks—ending at the time of the next new moon.”

The dates:

Aug 14 , 2015 – First New Moon before the Eclipse (there is a New Moon happening at the same time as an Eclipse—Sept. 13)

***Aug 29 – Full Moon before the Solar Eclipse (peak of the eclipse cycle)

Sept 13, 2015 – New Moon and Partial Solar Eclipse

Sept 23, 2015 – Fall Equinox

***Sept 28, 2015 – Super Blood Moon Eclipse (start of panic phase)

***Oct 13, 2015 – New Moon (this would mark the end of the panic phase) – six weeks after the Aug. 29 full moon.

So … there’s a lot happening in the area of cycles right around now. Oct 13 starts to look important to a possible major market turn.