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The Math Behind Market Turning Points


Note what happens at the midpoint between two strong one and nine dates.

As Todd Harrison noted yesterday, the S&P closed on Tuesday at 1091.94. And the high and low on the SPY was 110.18 and 109.02, respectively -- literally a penny away from 110.19 and 109.01.

The Math Curse continues.

As I was looking through some charts yesterday, it also dawned on me that November 20 of last year, a day from November 19 -- not March 6 of this year -- was the low for many sectors: emerging markets, the metals, the brokers, and others.

And Jeff Cooper was quick to share with me that the S&P crossed 1100 on October 19 and the Dow peaked the week of January 11, 2000 -- actually the January 14, which was the midpoint between January 11, 2000 and January 19, 2000.

The notion of the midpoint between two strong one and nine dates caught my attention. Not only did the BKX peak on the midpoint between October 11 and 19 of this year, but the end of last week was the midpoint between October 19, 2009 and January 19, 2010 (interestingly, a period of just more than 91 days). And as Minyans will recall, the end of last week brought with it peaks in gold, the S&P, the Dow, and the NASDAQ; a bottom in the dollar; a sudden drop in oil prices; the addition of Greece to the troubled sovereign list; and the repayment of TARP by Bank of America (BAC).

Ever since I read last Sunday's article on how Veteran's Day was the "turning point" for President Obama's decision on Afghanistan, I've been struck with the concept of one and nine somehow also signaling "turning points" -- beginnings (one) and endings (nine) in a never-ending chain of events in time.

Over the past several weeks, several Minyan professors have commented on the "non-confirmation" of different market sectors, as the major indexes have reached new highs. And I can't help but wonder if the "turning point" for the market is upon us, but rather than playing out in a single day as it did last November and this past March, it's playing out over a longer period of time.

Time will tell if the period of time from October 19, 2009 to January 19, 2010 has any meaningful significance, but with last week's "midpoint" activity and all of the various one and nine hints, the market has been dropping lately, I'm sure beginning to think so.
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Position in SPY, SRS, and JPM.
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