An Analogue

Yesterday we talked about the significance of Gann anniversary dates focusing on the NDX July 19^th, 2007 primary high.

After he passed, personal charts of Gann became available that showed he was counting squares in Time as well as Price.

His charts revealed he was counting square days and weeks from important highs and lows.

This year is 16 or 4 squared years from 2007, so the anniversary of the 7/19/2007 would be more important to Gann.

Underpinning the potential significance of the two 7/19 highs in both 2007 and 2023 is that there was an important low on March 13-14, 2007 just as there was on March 13, 2023.

You can’t make this stuff up.

But let’s go down the rabbit hole a little further.

In early to mid-August 2007 the NDX undercuts its 50 day moving average…just as it has done recently here in 2023.

Yesterday, the NDX reclaimed its 50 day line just as it did in 2007.

The seemingly successful test of the 50 day line in 2007 was short-lived.

The NDX reversed leading to a full-fledged Flush Of the Fifty.

As I wrote yesterday, if it were that easy, ‘a test of the 50 day,’  then everyone would be rich.

The reversal perpetuated a 10% decline in 6 trading days. The 7^th day the index turned up.

This morning the futures are down with authority already. It looks like the test of the 50 day isn’t ‘sticking’.

Whether another air-pocket is on the table with a full-fledged Flush Of the Fifty largely will depend on whether we get downside follow-through today and whether stocks close on their lows.

A 10% decline from yesterday’s high projects to the 13,700 region where there is an open gap from May 25^th.

In sum, the back of the trend was broken last week with breakage of the trend line off the March 2023 low.

Rather than be in a runaway move, instead, we have morphed into a runaway decline.

Allow me to explain.

Since the NDX 3 Day Chart turned down directly off the July 19 high and following the initial reflex bounce, we have not seen anything more than 1 day rally attempt failures.

In fact since July 25^th the NDX has not been able to close above a prior days high----until yesterday.

And, that ‘accomplishment’ is going south this morning.

This change in character is the Sign Of the Bear. Downside follow-through and a close below yesterday’s low today implies Mr. Momentum has his bear suit on.

As you know, the July 19, 2007 peak was the orthodox or primary high in 2007.

While the market went on to rally into the end of October 2007, that proved to be a false breakout with the entire gain  from the breakout over the July high wiped out in one week.

Be that as it may, the implication is that this October will be a turning point -- especially as it also marks the one year anniversary/cycle of the October 13, 2022 low.

It is also a square in time anniversary of October 1987 -- 6 squared or 36 years ago.

It is to be determined whether this October  is a high or a low.

If it’s a high, my expectation is we drop into January, 2024.

“it would not be surprising to see a rally attempt following an undercut of the 50 day moving average as early as today---following which my expectation is for as Flush Of the Fifty.”

I wrote the above in yesterday’s report.

While the NDX did undercut its 50 day line, the SPX rallied from Phil D Gap from July 12^th and a probe of the June double tops---and our 4450 INITIAL target.

A failure back below those June double tops, the open gap and the 50 day will be a technical trifecta opening the door to the Bull/Bear Pivot at SPX 4200.

The VIX hasn’t had a pulse all year.

A lamb is sleeping against a lion.