After the spike on October 13 (that coincided with the end of the Money Flow T), I wrote that I was expecting one of two scenarios to unfold (assuming the general forecast was correct that T13 ends soon and gives way to a new bear market) :
"1. October 13 marked an interim top; we correct into October ~20 then push higher into the second week of November before declining rapidly into the nulled echo low.
2. October 13 started a fresh divergence topping process where October 20 will be the middle of the divergence, suggesting a final price top for T13 on or about ~October 27. From there, there is a short term correction and then a rally into November 12 that falls short of the October high and fails, leading to a steep decline into the nulled echo low. Basically, a fractal of what happened in April-May."
As of the close today, both scenarios are still in play. I alert you that a third scenario exists:
3. The Money Flow T called the exact end of T13 on October 13, and we will not see 1184 again on the S&P for several years.
While I think this third scenario is relatively unlikely (given what the other cycles show), you saw what Foreclosuregate did to the banks on Thursday and Friday. Should the mortgage crisis start to metastasize next week across the broad market, it might bring down the whole house of cards.
While I think this third scenario is relatively unlikely (given what the other cycles show), you saw what Foreclosuregate did to the banks on Thursday and Friday. Should the mortgage crisis start to metastasize next week across the broad market, it might bring down the whole house of cards.
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Thanks for the update, Parker! Your work is very much insightful and appreciated!
ReplyDeletedakota
Thanks Parker you show real flexibility in your thinking and analysis. Your third idea today has been in the back of my mind. Something just doesn't feel right. Regardless we will all know shortly.
ReplyDeleteas dakota said so well -- thank you Parker.
ReplyDeleteall best to you-
kohai
So, from the November peak, are there two Null echo lows projected? One from the current July and August Lows and one from the 3.5 month 2008/2009 lows? ARre these projected from the November top?
ReplyDeleteJoe
ReplyDeleteI think November 12 is better thought of as an "end" to T13 than a "peak". For example, see the video I did looking back at T12. Using my start date and the final low produced a mid-December 2007 target, which was not a "peak" but was within a week of when the new downtrend started for good, i.e., the "end" of T12.
Terry is a better one to ask about the specifics of the nulled echo low. It's simply Terry's start date used in conjunction with the March 2009 bottom. Here, the nulled echo low would be ~15 trading days after November 12, or ~December 6.
"Should the mortgage crisis start to metastasize next week across the broad market, it might bring down the whole house of cards."
ReplyDeleteFrom your lips to God's ears....
Thanks for your great work Parker! Please look at what happens to the indices on the days that the Fed auctions POMO's. Here's the schedule for these sizable injections of liquidity into the markets: http://www.newyorkfed.org/markets/tot_operation_schedule.html Next one is tomorrow from 10:15 to 11:00
ReplyDeletePOMO is like installing a turbocharger on your car. If your car is in good condition to begin with, the turbo enhances performance.
ReplyDeleteBut if your brakes go out, the turbocharger won't prevent a wreck. And if you have a major oil leak, the turbocharger won't prevent your engine from seizing up.
All one has to do is examine the Fed's actions in 2008 to see that monetary policy is ineffective when the market has decided it wants to head south.
"All one has to do is examine the Fed's actions in 2008 to see that monetary policy is ineffective when the market has decided it wants to head south."
ReplyDeleteLikewise, can one say that despite the fact civilization is hanging by a thread, economic reality is irrelevant if the market has decided it wants to head north?
Yes civilization is hanging by a thread, ….it is always hanging on by a thread…yet is goes on far beyond most expectations.
ReplyDeleteThe market can stay irrational longer than traders can stay solvent especially if you are a top (bottom) picker.
“Go with the flow and take advantage of the moment” - Leo Melamed
“I’m not greedy, I don’t care about the first 10% of a trend or the last 10%, all I just want is the 80% in the middle.” – Tim Mack
Parker
ReplyDeleteYou and Terry are meshing your own versions well together. Thanks for sharing. In GLD if you take the 9-13-10 price low to the 10-29 14MFI Hi? u get a day away from the 10-14-10 top in GLD also by my calculation. i know 9-13 wasnt a steep low, but a low in very strong uptrend. Hey that 14MFI got me out near the op for now. many thanks. KL
Pardon my naive interpretation - but it looks to me like if you take the 6/4/07 NYAAD high to the 11/20/08 low, that is 372 days. Adding that to the same 11/20/08 low gives you 5/17/10.
ReplyDeleteIf i take the same 6/4/07 NYAAD high to the 3/9/2009 low, it gives me 444 days, which points to a turn around Dec 10th, 2010.
As you showed - using 6/4/07 may not be the right answer, since it may be the peak of momentum, but not price.
As we also know, late Aug was a LOW, not a peak.
So, why isn't it the case that May was the high, Dec will be a double top / nulled echo high, and the split bottom results in a interim Aug low?
Thanks!
Achal
ReplyDelete"If you take the 6/4/07 NYAAD high to the 11/20/08 low, that is 372 days. Adding that to the same 11/20/08 low gives you 5/17/10."
Yes. This was Terry's conservative case. Using my start date (midpoint of divergence between NYAD high in early June and price high in mid-July 2007), we get a conservative target the last week in April 2010 which matched the actual peak.
"If i take the same 6/4/07 NYAAD high to the 3/9/2009 low, it gives me 444 days, which points to a turn around Dec 10th, 2010."
Yes - this is Terry's nulled echo low theory.
"As we also know, late Aug was a LOW, not a peak. So, why isn't it the case that May was the high, Dec will be a double top / nulled echo high, and the split bottom results in a interim Aug low?"
Anything's possible I guess. But in theory, Terry has shown that using his start date with a final bottom in a multiple bottom pattern never produces a final top.
My innovation is the split divergence start date improves the timing of target dates. When used with the final bottom in a multiple bottom pattern, it produces the end date for a long range AD T.
Please review my "Look Back at T12" video for more info.