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When Time & Price Balance Out, Look For A Change In Trend

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A change in trend may be playing out.

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Throughout the first half of the year, we flagged the significance of the 2100 SPX level being 10 revolutions of price up from the bear market low of 666.

Ultimately, after months of compression from sideways action the market reacted with a 4 day waterfall decline to 1867 on August 24.

On the Square of 9, the number 1867 'points to'/aligns with October 2. On that day, the SPX scored a large range News Reversal Day following an ugly NFP report.

Just days before, on September 29, the index tested the August low on a decline to 1872. On the 'Wheel', the number 1869 aligns with September 29.

When working with the Principle of Squares, you always want to allow for 3 degrees or so, plus or minus.

So, in late September/early October time and price balanced out. When this occurs the normal expectation is a change in at least the short term trend---if not the intermediate or primary trend.

In addition to time and price squaring out or balancing out, the range can square out.

As an astute fellow trader pointed out to me, the 1872 low in late September to the 2080 recovery high is 208 points (interestingly 208 is a 10th of the index level 2080).

On the Square of 9, the number 208 is 180 degrees or opposite August 24, the crash low.

In other words, 3 days ago at 2080 price pointed to the low day and the low day pointed to a price of 2080.

Time points to price, price points to the time when a possible change in trend is going to play out.


(Click to enlarge)

Regular subscribers to the Daily Market Report know that there are square-outs and there are square-outs.

Not all square-outs are major turning points, but all turning points are square-outs of time and price or range.

As W.D. Gann stated, when time and price balance, LOOK for a change in trend.

It is the behavior of the market (or a stock) when time and price balance, that tells the tale. Sometimes turning points are not highs or lows but accelerations.  It is the behavior that counts. Just as it is the behavior following a break of a trendline or the break of a significant prior high or low---as often there can be false breakouts...overthrows or undercuts.

Speculation is observation, pure and experiential.



No matter what the market does Square Of 9, Wheel of Time, & Price does a great job of calling rallies and declines and separating noise from real turns.

Conclusion. So the question is whether the SPX has simply rallied back to the scene of the crime where the market buckled on August 21 for a bearish backtest in league with a backtest of its 200 day moving average. Or did the index carved out an important W Bottom?

Interestingly, this is playing out into an important anniversary. Yesterday was a big pivot high following a huge reversal month in October 2011 on the 4 year cycle. The SPX declined 135 points in 4 weeks from that high into late November...the anniversary of the 2008 crash low.
4 years prior to that October 2007 marked The Top and a 910 point decline.

October 28, 1929 was an historic crash.

The market has a memory and in my experience, it pays dividends to watch the behavior on important anniversary dates/vibrations.


What, if anything, will a possible high turn out to be in late October 2015?

Will it be a pause prior to capturing the 200 day line with authority on the way to new highs or is this a return rally and test of the break point?

The market often (not always) offers a graceful exit. Is that what were getting in late October 2015?
If the market rallies into Friday and what is fiscal year end for many of the largest mutual funds, will it be another dead man's party as I suggested was the case with the rally into Halloween in 2007?

Form Reading



Twitter: @JeffCooperLive

Get Jeff's commentary plus day & swing trading ideas each day with a FREE 14 day trial to Jeff Cooper's Daily Market Report.
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No positions in stocks mentioned.

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