Will the Market Bleed to End Obama’s Second Term?

The charts below depict what happened when Bill Clinton was finishing his second term (2000) and when George Bush was finishing his second term (2008).

The market rallied into September 1, 2000 as Clinton's second term was coming to a close, and then dropped 41.5% into its November low.

The market topped on August 15, 2008 as Bush's second term was ending, and lost 48.4% going into a November low.

What is interesting is that both these dates also tie to waterfall declines after late August/early September highs in 1987 and 1929, respectively.

The confluence of this time period was underscored by the square-outs of these time frames in recent reports.

Additionally, we've flagged the square-out in weeks from the Oct/Dec 1974 double bottom which ties 2176-2184 weeks ago and coverts to current historic tight trading band in the SPX

There is something else that points to a major turning point.

If you take a Fibonacci 38% in time of the 1987 low to the 2007 high as measured from the 2009 low, it gives mid-October 2016.

If you take a Fibonacci 61.8% in time from the 1987 low to the 2000 high as measured from the 2009 low, it gives late October.

There is something else.

From the October 1932 low to the October 1974 low is 42 years.

From 1974 another 42 years gives 2016 for a possible low to low to high cycle.

Theoretically, October could be a high if the market were a fine Swiss watch, but the two term presidential curse looms large.

Conclusion.

Reports show the NYSE McClellan Oscillator (a measure of breadth) went negative on July 27 and has remained negative despite three all-time new SPX highs this month.

This is a very rare technical bird which has never failed to define a significant top…such as late December 1999, April 2012, July 2014 and  late May 2015.

The point is that while the late December 1999 instance defined a high in the DJIA soon after in January 2000, the SPX and NAZ exploded into March.

The market can do anything.

Could the market explode higher from this historic flat for another month or so?

The simple answer is yes.

But, there will be blood.

The whites of the bears eyes are out there.

We await them, bloodshot they may be.

Click here to learn about how Jeff Cooper is crushing the market this year.