The Market's Remarkable Symmetry
The market may have an agenda higher in terms of time and price, but... there are many clusters of time, price and pattern projecting a turning point in this neighborhood.
"We skipped the light fandango, turned cartwheels 'cross the floor
I was feeling kinda seasick, but the crowd called out for more
The room was humming harder as the ceiling flew away
When we called out for another drink, the waiter brought a tray."
-Procol Harum (A Whiter Shade of Pale)
"Fine poetry is the music of mathmatics...numbers singing.
You have to look behind the words to understand the meaning."
-The Good Shepard (2006)
"Everything on earth changes.
We have no abiding city here.
It is God's will that we should part
Wih what is dearest on Earth.
We ourselves change in many respects.
We are not what we once were.
We shall not remain what we are now."
-Vincent Van Gogh
Markets often end as they began. Often, the top reflects the bottom, and vice versa. Often, right before our eyes, remarkable symmetry exists in the market if we take the time to look. I've taken the time, so let's look.
- Thursday saw the biggest DJIA advance since the bottom in 2002.
- Many times, markets play out in threes. For example, the three drives into the March 2000 high on the monthly chart of the S&P, the three drives into the "internal" low by the S&P in July 2002 and the triple bottoms into March 2003 in the S&P.
- A look at the monthly chart of the S&P from March 2003 shows what appear to be three drives into a potential high.
- The first leg up from March 2003 began at a price of 789 and ran one year to 1159, a range of 370 points (close to the 360-degree circle). Adding 370 points to the last significant low in June/July 2006 at 1219 S&P gives 1589. Moreover, a "workout" of a June/July high would mirror last year's June/July workout to a low.
- The one year, and near 360 point move up, on the S&P reflect a potentially meaningful square out.
- Let's take a look at a weekly chart of the S&P.
Click here to enlarge.
From a virtually flat 2005, the weekly chart shows three legs up, which began from a price of 1168 in October 2005. The move topped out at 1326 in May 2006 for a range of 158 points. 158 points added to the last important weekly swing low at 1364 in March 2007 gives 1522. Remember our old friend, the 1521 pivot? This is a natural square (39 squared), and represents two squares of 360-degrees up from the June 2006 low on the Square of Nine Calculator. From my perch this is the Maginot Line – the Bull/Bear Pivot. Although the S&P is handily above this 1521 level, the important thing to remember is that trade below 1521 now, after last week's "crystal clear" breakout, would trigger a Boomerang Sell Pattern – a failure pattern. And remember- fast moves come from failed moves.
- It is interesting that 1521 more or less defines the mid-point of the 1500 – 1530 Bull/Bear June battle. It is interesting that currently 1521 S&P corresponds approximately with a Necktie of the 50/20-day moving average on the S&P.
Click here to enlarge.
- From last year's 1219 low to this year's February 1461 high is approximately 240 points (a division of the circle). Adding 240 points to the 1364 March low gives 1604 S&P. If many times the top is reflected by the low, let's take a look at the range of the February/March decline which played out from 1461 to 1364 S&P, or 97 points. 97 points added to the last swing low at 1484 gives 1581.
- Let's look at just the waterfall part of the decline, or February 27, which is 60 points; or 1449 to 1389. Measuring from the point of the last thrust last week at 1519, a symmetrical 60 point thrust gives 1579.
- Another way to "prove" a turning point set-up, or the geometry of the market and the notion that the bottom reflects the top, is to measure a mirror image of the bottom. In other words, if you take the 97 point February/March decline and add 97 points on top of the February 22 1461 high, you get 1558.
- The first leg up off this year's March low at 1364 was 64 points. 64 points added to the June 27 swing low at 1484, gives 1548.
- The first thrust up from the July 2002 S&P low at 776 ran to 965. It was 189 points or approximately 25%. A corresponding culmination leg up here (if that's what the legs, patterns, and cycles are suggesting) equates to 1553 – i.e., 1364 plus 189 points. This also "proves" the 1364 level as a harmonic of the 1553 geometry. Remember that the March 2000 S&P high was 1553.
- I had mentioned before that six squares up from the 2002 bear market low is 1576; but it bears repeating, since many market observers have recently jumped on the momentum bandwagon; and embraced the idea that even if the market is going to decline, it is safe now - because a blow-off could not have run its course. The thinking being that a blow-off is likely to steam the market through the summer, just as it did in 1987. Perhaps. But, that's awfully pat and in my experience, history doesn't repeat exactly; and when it does repeat, it does so with a twist. This is the way it always is at market turning points– market participants are always convinced by the market's air of invincibility and the idea that strength will beget even more strength; and that parabolics can go even more vertical. However, I recall that the last run in 1987 began from a May corrective low, while this year the corrective low prior to the runaway advance occurred two months earlier in the year, i.e. in March. Are we working with a two month, or so, offset year?
Six squares of 360-degrees are significant. 360-degrees is a full cycle, while a true square, or cube, has six sides. Consequently six squares of 360-degrees represents a philosophical squaring of the circle.
In the same vein, a 540-degree "culmination move" up from the June 2006 of 1219 equates to 1594. 540-degrees has played out its culmination moves many times in history as six squares of 90-degrees equals 540-degrees.
It is interesting that the July 2002 low of 776 squares out on June 1st, which was the S&P high prior to last Thursday's breakout.
Here we are, seven weeks from that June high, in the seventh month of a 'seven' year. According to W.D. Gann, 'seven' is a number of change, reversal, acceleration, and panic.
If you want to know why Octobers have a history of panic, consider that it is the seventh month from the true beginning point of the year, or March 21, the Spring Equinox.
Here we are, 60 months from the July 2002 orthodox low. Is this parallel to the turning point in August 1987, 60 months up from the August 1982 low? Is it parallel to the turning point in the first quarter of 2000, 60 months from the beginning of a runaway bull market, in the beginning of 1995?
Click here to enlarge.
This week we will be 60 days, or five months, from the February 22 high.
Interestingly, this week the S&P will be seven years and four months from the March 24 2000 high. Why is it interesting? I believe, as W.D. Gann, that all highs and lows, according to the Law of Vibration, are related in time and price, and many times when time and price square out they are actually one and the same. Seven years and four months is 380 weeks. This vibrates of the 380 DJIA price high in the summer of 1929.
Classical, technical considerations indicate a breakout, such as we saw last week, should run a minimum of three to six weeks. The other consideration would be an immediate climax culmination run of another six days from the breakout day. Given the last two days of sideways action, that does not seem to be what is playing out.
The market may have an agenda higher in terms of time and price, but, as you can see, there are many clusters of time, price and pattern projecting a turning point in this neighborhood.
A legitimate breakout should see no hesitation past Tuesday. Tuesday into Wednesday should be the key for expiration.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter