The First Mouse Gets the Squeeze, the Second Mouse Gets the Cheese
“Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.” John Kenneth Galbraith
I listen to the financial news all day while I trade. Not for information, but to glean psychological canaries when and if they should fly through the window.
On Thursday morning I was surprised to hear one prominent skeptic go through a litany of warnings only to end by saying, “I'm not so sure you have to worry about it right here.”
A fellow trader pinged me yesterday to say that pundits are saying “a crash is probably at least two months away, so now is a good time to buy more stocks.”
You really can't make this stuff up.
Everyone's a market timer when risk is ripe.
Speaking of timing, Thursday was an important day but today could be the most important day of 2017 so far.
Why?
June 9 saw a panic attack and large range signal reversal in the markets. It was much more pronounced on the NAZ than the SPX.
Yesterday we got another large range reversal from all-time new highs.
The SPX bounced back while the NAZ left a Key Reversal Day.
Watching the financial news and tweet stream, there was no sense of panic as marquee names got taken to the woodshed.
Of course, we've seen it before. A loss of momentum and a reversal, but the key factor, a break of support doesn't occur.
There is reason to believe this time may be different.
Today is the 49th Gann Day from June 9. This opens the Gann Panic Window counting from a prior significant high. Although it is arriving without a series of lower lows, this 7 week interval is none the less significant if a test failure is playing out.
Today may be the most important day so far in 2017 because we may get follow through from a test failure of the June 9 high.
The topping process typically involves a first break and a return rally test failure.
This was the pattern in the SPX at the 2000 top and the 2007 top.
After the first sharp break, players initiate hedges and bears jump on the short side. Consequently, after a first sell signal, there is often a squeeze which often leads to a nominal new high.
A rollover from that point is the safest place to short.
In other words, the first mouse gets the squeeze, the second mouse gets the cheese.
There are an array of time and price harmonics that underscore the idea that a test failure just played out and that we will see downside follow through as the Gann Window opens.
Yesterday one of my Gann Wheel students asked me if this week could be a turning point because it was opposite the major swing low on January 20, 2016.
Indeed we are 18 months or 540 degrees/days from the January 2016 low.
Regular readers know that this 540 degree period is a true square or cube (6 sides of a cube X 90 degree angles).
They also know that late July 2016 was a square-out as it aligned a price of 1813, the SPX low at that time.
Importantly, straight across and opposite 1813 is 2458/2459.
The low of Thursday's stab down was 2459.
Here's what's important. From 1813 to 2459 is 3 ½ revolutions of 360 degrees or squares.
3 ½ revolutions is 1260 degrees: 360 X 3 plus 180.
However, it is also the Biblical Times, Time, and Half-Time: 720 (360 X 2), 360 and 180.
From my perspective the SPX is working out a top of significance from this 2459 to 2482 level.
The SPX was initially rejected from 2454 on June 19 but had a date with destiny at our 2480-2482 level.
As W.D Gann stated, time turns trend. Finally 2482 was hit around the anniversary of the 1998 top-an important 19 year anniversary as alerted last week. The high in 1998 was followed by a Black Swan event, the LTCM debacle and a more than 20% panic into October.
Remember that 19 squared is 361 which represents 360 and completion.
The proof is that 19 aligns with the Vernal Equinox and March 21, the true, natural beginning of the year.
To recap, 2482 is significant as it aligns with/vibrates off 666 low which aligns with June 6.
So the first break on June 9 ties closely to this vibration with June 6 and 2482.
(Note: the color change from blue to black represents thousands)
I don't think the market's grandee reaction from this Time & Price Café is happenstance.
At the same time, the difference between the 666 low and the idealized high of 2482 gives 1816…basically the low from January 2016.
Maybe something, maybe nothing but 1816 is mirrors the Golden Ratio, 1.618.
Let's take a look at the dailies on the SPX and NAZ.
The key level is going to be our old friend 2440ish which ties to the rising 50 day moving average.
As we showed recently, the current pattern is reminiscent of the Witches Hat Top in 1998 which was itself a fractal of the 1929 top.
The NAZ bounced off its June 9th top in yesterday's decline.
Today may be the most important day of the year in the NAZ-at least so far.
If the prior swing high is violated especially on a closing basis on the important Friday weekly closing basis an important sell signal will be on the table.
99.999% of traders have never even seen the Square of 9... let alone understand its potential.
Do you dare to be different?
