The turn is in.
The Summer Solstice was on June 21 (Wednesday of this past week). The Nasdaq topped on June 9. For my Trader’s Gold subscribers, I’d predicted a turn for ES/SPX on that day at 2446, which it hit (and I called the NQ top as it happened).
However, I also predicted one more top after that for ES/SPX (last weekend, in fact). I predicted that top for SPX at 2452, but I missed by two points, as it went up to almost 2454 before turning over. That was the final high on June 19.
This weekend, the SP500 is in the second wave of the fifth (of the larger fourth wave), with more downside to come, and the Nasdaq is at the top of the second wave (of the fourth). We may take the rest of the summer to finish the fourth wave.
The second wave of the current daily chart sequence took ten weeks to complete. I would give the fourth wave at least that amount of time to complete.
Andy Pancholi’s major turn date was on June 22. Note that we had secondary highs for both indices on June 23.
I decided to do a bit of research on the probabilities of a turn on the Summer Solstice. This is what I found out:
From Market Astrologer’s Blog
Of the past 53 years, the US stock market has turned 74% of the time at the Summer Solstice.
“We’ve been back-testing the last 53 times this event has happened, and have found that the Summer Solstice has previously triggered a trend reversal down roughly 44% of the time, a trend reversal up 30% of the time, and no trend reversal at all 26% of the time. (more on this on the Market Astrologer’s Blog).”
From Signal Trend (find more on this on their site)
Historical Summary: The 50 Year, 100 Year and 4 Year Record
|Spring / Fall Equinox Cycle – Compounded Returns.
* These are not annual returns. They represent 6 month DJIA returns.
From 1950 through 2004, ALL of the stock markets annual gains are concentrated in November –
April. The average compounded return for the 55 Nov -April periods was 7.62%. The average
compounded return for the 55 May – Oct periods was – 0 .1%. Dividends were excluded.
From 1900 through 2004, 86% of the stock markets annual gains are concentrated in November –
April. The average compounded return for the 105 Nov -April periods was 4.27%. The average
compounded return for the 105 May – Oct periods was .68%. Dividends were excluded.
The Bottom Line on Summer Solstice
The US stock market usually turns on the Summer Solstice (74% of the time). The returns over the summer months historically are negative. All this fits with a turn down now and a fourth wave lasting through the summer.
Tops in your field DZ 2
Couldn’t be happier … KK 2
Have not had a losing week RW 2
The best of them JL 2
Get an upper hand … JC 2
A true expert in Elliott Wave FL 2
The Market This Week
Here's the latest daily chart of ES (emini futures)
Above is the daily chart of ES (click to enlarge, as with any of my charts). The count has not changed. What appears to be a third zigzag of the third wave (you can only have three patterns within a corrective wave—this third pattern starts at blue X on the chart) continued slightly higher as predicted last week and continued to build a potential very large expanded flat at the top of the circle red third wave. This past week, we finished the topping process.
The USD currency pairs look like they've all turned, but the countertrend moves in some of them may not be a fun trade. My Trader's Gold group knows the ones to concentrate on.
Summary: We've completed the third wave in ES at the top of a possible expanded flat. NQ has also turned, but the configuration of the waves down should be different then ES. The first wave down in NQ appears to be the first leg of a zigzag.
Volume Head's Up: Look at the relative volume at the bottom of the above chart. At the ends of waves, the volume tends to drop to extremely low levels. We certainly have that happening at the top of this wave. Volume will pick up substantially as we start to move further down in the fourth wave.
After completing the larger fourth wave, we'll have one more wave to go, which could be an ending diagonal as a fifth wave. The long awaited bear market is getting closer.
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