A Test of Key 2100 Is on the Table
For over a month now readers, have been forewarned about the late August/early September period.
Last week on September 8, time turned trend as the SPX ‘squared-out' its 2193 all-time high.
This is because 2193 is 90 degrees square September 8.
The next day the market plunged.
This is the exact relationship at the March 6th, '09 low. At that time, 666 was 90 degrees square March 6.
This is the exact same relationship that occurred in the first week of October 2007 which is 90 degrees square that years peak of 1576.
This is the exact same relationship that occurred in the first week of October 2002 bear market low with that time period being 90 degrees square 768, the price low in October 2002.
Not all square-outs are created equal. While all major highs and lows are major square-outs in keeping with W.D. Gann's Law Of Vibration, not all square-outs are major highs and lows.
It is the BEHAVIOR subsequent to a square-out that tells the tale of the tape.
Speculation is more art than science.
At the same time, 2193 straight across and opposite 666 on the Wheel.
It is significant that 2100 is precisely 10 revs or squares of 360 degrees UP from 666.
In other words, if a 360 degree cycle in time and price are important, than it stands to reason that a big cycle of 3600 degrees is significant.
On Thursday night, we noticed something interesting. The price low of 666 in 2009 was a mirror image of the date September 9, 2016 because Friday equals 9/9/9 (2 +1 +6 is 9).
Maybe something, maybe nothing, but the market reacted violently.
The first time the SPX breached 2100 was February 17, 2015. The nominal push above 2100 was short-lived followed by a shakeout to 2040.
Several forays above 2100 throughout the spring of 2015 failed to generate momentum and the index set a record high in May 2015 roughly 90 degrees/days from the initial move above 2100 from February.
Ultimately, several other attempts over the next 360 degrees/days would fail to unequivocally capture 2100 with several failed attempts perpetuating waterfall declines.
This occurred last August…180 degrees/days from the initial attempt to vault 2100 in February 2015.
Another waterfall decline played out in January 2016 from a November 2015 pivot high, roughly 270 degrees/days from the primary attempt in February 2015.
Each episode elicited a decline into the low 1800's.
There was another waterfall from an attempt to claim 2100 that occurred from a 2120 pre-Brexit pivot high in early June.
This time the SPX did not decline to the low 1800's.
There was a change in character with the SPX holding 1992.
1995 is straight across and opposite June 27, the low of the waterfall decline (working with time and price you always want to allow plus or minus 3 days or 3 points on the SPX).
So another square out occurred at the Brexit Low.
Happenstance?
I don't think so.
Contrary to what the vast majority of market participants believe, the market can be timed. Not always. But when price runs hard into a these time/price harmonics and stops on a dime and turns, the market is talking.
In a persistent bull run, players do not feel they need a market timer. The trend is their friend. But when the trend bends, they need a market timer.
The trend started to bend last August and 360 degrees later on August 15th, the SPX set an all time high of 2193.
90 degrees down from 2183 ties to the August low of 2147. Another decrement of 90 degrees lower ties to 2100.
When the SPX snapped 2147 last Friday, the index accelerated with the futes flirting with 2100 pre-open on Monday.
Monday's rallied saw the index squeeze above 2147 on a closing basis.
One day does not make a trend.
The SPX gave up virtually all of Monday's gains on Tuesday.
Monday's rebound may have the fingerprints of The Hand who is haunted by fall panics — especially Friday/Monday debacles ala 1987.
However, IF arbs and large ETF players were blindsided by Friday's decline and orchestrated Monday's squeeze after a down open in order to both discard longs and get short at better prices, then they have an agenda to take the market down with authority. And that may be the message of Tuesday's give back.
If so, then the pre-Brexit pivot high at 2120 will falter and the critical 2100 will fail with the possibility that the SPX could be magnetized to the 2000 strike.
At the same time if the margin man is on the prowl and the forced selling pervasive on the tape yesterday persists, as offered mid-day Tuesday, I would not discount the idea of a waterfall decline to 2000 around options expiration on Friday.
I am not saying that kind of crash will play out—only that the backdrop for a waterfall decline is similar to some of those that have played in the past.
Moreover, eerily, we have flagged a few weeks ago, 87 years ago was 1929 and 29 years ago was 1987.
Bizarre.
Additionally, the numbers 87 and 29 align on the Square of 9 with both pointing to September 9.
The angle of attack to the downside on Friday may be cycles yelling at us to pay attention.
Volatility has woken up. Whether it falls out of bed into a full-blown panic remains to be seen.
But the odds of that happening increase with downside follow-through today and a break of 2100.
TZA Trade Walkthrough
In addition to the time and price harmonics that set up last week, the SPX had traced out a subtle Head & Shoulders Top formation:
The projection is also to the critical 2100 level.
Consequently, on Friday morning before the open, we sent an alert to subscribers to initiate a long swing position in TZA if it traded above 27.50, as this would trigger a Boomerang buy setup.
This occurs when there is an undercut of a flat followed by a knife in the opposite direction.
This occurred on the open Friday on huge volume — underscoring the idea of a genuine Gap & Go.
Our target for half the position was 30, which we hit yesterday, and the stop the balance of the position has been raised to breakeven, in keeping with our swing methodology.
As you can see on the above short-term TZA, it traced out a possible little Cup & Handle.
Follow-through suggests a leg higher, which ties to a break of 2100 on the SPX.
99.999% of traders have never even seen the Square of 9... let alone understand its potential.
Do you dare to be different?
