You’d make a better window than a door…” – You’re Not the Same Anymore, The Strokes
“I like the casino business. People walk in the front door and walk out the back door and leave their money in between.” – Steve Wynn
The market makes a better window than a door. It allows us to see through it, but walking out the door with the money is an art… the art of timing.
My dad was a great tape reader. He used to tell me two things about the market.
1) Stocks don’t move, they are moved.
2) Everything is timing.
Let’s look at some timing.
In the aftermath of a sharp sell-off from a September 2 high, on the 90 year cycle that marked the 1929 top, the SPX carved out a double bottom on September 24 and October 30.
That double bottom perpetuated a rally into a convergence of cycles due late December/early January — namely the 2 year cycle from the Christmas Crash low at the end of December 2018 and a 120 day/degree cycle from the aforesaid September 2, 2020 top.
This convergence was respected with the SPX, NAZ and DJIA leaving large range Key Reversal Days on January 4, the first trading day of 2021.
For its part, the stronger IWM topped out ahead of the other indices and found a trading bottom on January 4.
The indices reversed from the January 4 signal reversal bar to leave an outside up week.
So, the year started off with Key Reversal Days in the SPX, NAZ and DJIA, but ended with these benchmarks putting in outside up weeks.
The popular averages have not followed through from the outside up week that greeted the first week of the year — yet.
However, while the indices have been consolidating, under the hood mid-cap and small cap momentum names continue to surge.
The vertical barrage is spearheaded by EH, FUTO, BILI, NIU and CEVA — to mention a few.
Exemplifying the hyperventilating in these runaway names is that reversal bars don’t lead to no more than 1 to 2 day pullbacks followed by rips back to the topside.
For example, EH left Train Tracks on Friday in the aftermath of a 3 day 100% advance.
The following 10 min EH shows the solitary one-day turn down (trade below the prior day’s low) into an open gap was invitation enough for a more than 50% one day gain on Monday.
Notably, the lion’s share of Monday’s gains came from a Late Day Breakout (LDBO) when EH cleared micro triple tops for a Rule of 4 Breakout.
This is the kind of extreme price action we’re getting where a Lightning Rod (Large Range Outside Day) electrifies instead of electrocutes.
It was a good day for Hit & Run members.
Other triggered trades to kick off the week include OTRK, SEER, MGNI and CRWD.
Let’s be real. I’ve been trading since 1982 since starting my career at the famous Drexel Burnham office in Beverly Hills. The price action we’re seeing is unusual, to say the least. It dwarfs what happened in the euphoric run for the roses in 1999-2000 Bubble Top.
It conjures up what W.D. Gann wrote: “The most money is made when fast moves and extreme fluctuations occur at the end of major cycles.”
2021 is an important cycle year.
It is 89 Fibonacci years from the Super Cycle low in 1932.
It is 55 Fibonacci years from the 1966 secular bull market top.
It is 34 years from the 1987 crash.
It is 21 Fibonacci years from the 2000 top.
It is 13 Fibonacci years from the 2008 Great Recession.
It is 8 Fibonacci years from 2013, when the SPX cleared the 2000 and 2007 double top with authority, eliciting a persistent 3 year run.
January/February is 5 Fibonacci years from the major January/Feb low in 2016.
Late January is 3 Fibonacci years from the late January 2018 Spike & Reversal high.
The turn of the year was 2 Fibonacci years from the 2018 Christmas Crash low.
1 year ago in the sequence was the primary pre-crash high in January 2020.
Interestingly, the SPY closed at a record 381 on the first week of 2021.
This is the same level as the all-time DJIA closing high in 1929.
This may seem like voodoo, but I have seen these “correspondences” between one index and another play out historically.
W.D. Gann wrote about the significance of anniversary dates. My thinking is that “anniversary PRICES” can also be important vibrations.
For example, the DJIA low at the beginning of the bull market in August 1982 was 769.
The SPX bear market low TWENTY years later in 2002 was 768.
As well, we are in the 91st year from 1929 and on my Square of 9 Wheel, 91 is on the same vector as 381 and late January/early February.
Red is 381
Green is 91
Blue is Feb 3
So this cluster of time/price harmonics warrants attention.
120 days/degrees from the important September 24 low ties to January 24.
270 days/degrees from the March 23 crash low ties to January 23.
90 days/degrees from the important October 30 low is January 30.
The stage is set. We are in the wheelhouse for some dramatic price action.
