Is This a Near-Term Selling Climax?
“….Thursday‘s action leaves the SPX vulnerable to satisfy a test today or our months’ ago forecast of 4020.”
Interestingly, Time & Price ‘meet’ at 401 (SPY…4010 cash) on May 6 on my Square of 9 Time/Price Calculator.
I wrote the above in Friday morning’s Hit & Run Report.
Below is the Square of 9 Chart showing how 401 vibrates/vectors May 6.
The SPY dropped on 405 Friday, shy of satisfying 401 before bouncing to close at 411.
398 is one 360 degree price cycle down from 481.
As well, 398 (and by definition 481) aligns with May 16.
Breakage below 398 opens a Trap Door to the next 90 degree decrement lower.
A level Hit & Run subscribers have on their radar.
As noted last week, May 16/17 is the anniversary of the Buttonwood Agreement, which was the start of the NYSE in 1792.
Said another way, it is interesting that the SPX all-time high, the all-time high of the most overvalued market in history was square the anniversary of the start of the anniversary of the NYSE.
IWM, The Truth Teller, topped on November 8. May 8 is 180 days/degrees — a spot to look for a turn.
Given the “angle of attack” to the downside since the March 29 recovery wave two peak, this week may see a Selling Climax…a crescendo of selling with a violent reversal.
Early this year we flagged an IWM projection to 186.
Friday’s weekly close below 186 opens the door to an open gap in the 166 region.
Additionally, WD Gann’s Master Time Factor Cycle is in play in this May with “potential” to extend into June if May does not see a further washout.
A large daily bar down that is eclipsed by an equally large bar up is called Train Tracks.
My expectation is that there is a likelihood of dramatic climatic price action early this week.
Friday was a new low close for the bear market. A gap down today from a new low close signals it may be game on for this climactic action.
If we do not get it… it may be drawn out into June. As forecast in January, there was an idealized projection to 4010 SPX. This is based on the geometry of the Square of 9 Wheel.
There is a lot of synchronicity between 401 (4010) and 398 (3980).
As well, as the weekly SPX below shows, 3980 ties roughly to a Head & Shoulders top projection while it also undercuts a down-trending channel.
Conclusion. In sum, the overall downtrend became more intense last week as our expectation that a powerful 3rd of a 3rd wave played out.
The idea of a Thursday/ Friday/Monday panic washout has been the short straw since 1987.
That said counting from the March 29th recovery high, the Gann Panic Zone opens today and remains open to around May 20/21.
A Blue Thursday/Friday/Black Monday setup presents once again, especially with Friday’s new low close.
But only a decline below 401 and 398 SPY opens the door to that possibility.
If that occurs, the SPY could waterfall to 378 over the coming hours or the coming week.
A Black Monday could see the bulls throw in the towel… even though fear is supposedly missing.
Alternatively, if the market carves out another rally this week, it will be salmon for the bears… until we can finally get a downstream washout crescendo.
For the last five weeks, we’ve been hearing that the market must bounce since
“everyone” is so bearish.
First of all, there are those that talk bearish and those that bet bearish and they are seldom the same.
Second, if we were in a bull market, I would agree that bearish sentiment and bets should elicit a rally.
However, in a bear market, a universality of bearishness can prevail with lower prices just as a universality of bullishness can persist in bull markets.
Said another way, prices usually continue to fall in bear markets irrespective of overly bearish sentiment.
This is because TIME is more important than PRICE and it takes TIME to wring out excess bullishness (read buying the dip) just as it takes TIME to wring out excess bearishness.
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