Those following my analysis have been prepared for the market to get hit beginning in January as well as the intense rise in volatility.
For the last month, we’ve been pointing to a turning point into February 22.
This is 90 days/degrees from the major November 22 orthodox high in markets.
At the same time, the SPY ATH of 481 is 0 degrees square Feb 16, which market a pivot high from where a nearly 400 SPX slide played out in 5 days into last Thursday’s large range reversal.
Thursday’s near 100 point gap down was in keeping with the Rothschild’s aphorism noted last week: “Sell on the trumpets, buy on the cannons.”
As the SPX daily below shows, the opening flush following a persistent decline into the 90 day time period also shows a 5 wave structure consistent with a bottom of some degree.
A 50% retrace of the decline from the Feb 9 high to Thursday’s low ties to 4353.
The SPX closed above that at 4384 on the Friday weekly closing basis… potentially signaling that it has room to rally.
However, it must be said that no rallies since the all time high have been more than 3 to 4 days — the rally into Feb 2 pushing a tad higher on day 4.
Friday satisfied a 2 day rally.
Consequently, members bought SPY puts late Friday.
As well, the presumption is for the potential for an A B C corrective rally off Thursday’s low.
Consequently, if the SPX is indicating higher, it may come after a deep pullback first.
Following a possible A B C rally, a powerful 3rd wave waterfall to a new low for the move would be the expectation.
An idealized pullback based on an hourly SPX sets up at the 4270-4280 region for the B wave followed by a C wave rally.
A C wave rally could see the SPX push to 4450 region where a declining trend line intersects with a Ghost Line as seen below.
In sum, a weekly SPX shows the Droop Right Shoulder we’ve flagged in early February.
The Neck Lines is roughly 4300.
From the 4800ish ATH, that gives a potential projection to the 3800 region.
Breakage below last Thursday’s Bottoming Tail opens a Trap Door to 4020 or lower.
4020 represents 1080 degrees down from the 4818 SPX ATH.
This is two cycles/cubes of 540 degrees.
The SWIFT banking move against Russia has the consequence of draining liquidity and risks to the dollar status of world reserve currency.
Enter gold.
A weekly GLD shows the breakout 18 months (540 days/degrees) from the ATH in August 2020.
While it tailed off last week and is reminiscent of the failure in January 2021, the current breakout was triggered by a weekly Rule of 4 Breakout and entails a much longer consolidation.
180 degrees up from the 157 low for the consolidation is 183, which ties to where it was rejected last week.
Clearing and sustaining above 183 indicates a drive to 211 which is a full 360 degrees up from 157.
