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Trading Lessons

SPX to Join GOLD in Market Panic Cycle?

Stock-Markets / Financial Crash May 01, 2013 - 05:34 AM GMT

By: Anthony_Cherniawski

Stock-Markets

After much deliberation and calculations I have concluded that the blue Master Cycle (starting June 4, 2012) concluded on February 26.  This is what I call a “sleeper cycle.”  The reason that it passed my attention was that the VIX hit a 7-year low on March 14.  As a result, the volatility/velocity wasn’t enough to punch below the 50-day moving average as we had in November.  The same thing happened in the summer of 2006.  The result was that virtually every cycles analyst missed the 4-year low on June 12, 2006. 


The reason I finally recognized it was due to today being the 63rd day from February 26, which makes a Trading Cycle high.  This is only 12 days after a possible 51-day Trading Cycle low occurred on April 18.  Cycles may do a double pivot, which usually announces a phase-shift in the cycle pattern.

Another reason for this call is because February 26 fell on Master Cycle day 267, just 9 (8.6) days beyond the average Master Cycle duration of 258 days.  You will notice that all the high-to-high (rising market) cycles have been stretched, while the low-to-low cycles have been normal or truncated.  This is a direct result of the Fed pump, IMO. 

All of this is about to change.  Tomorrow is a very important Pivot day.  Whether the SPX makes a new high tomorrow or not, I believe that the Cycles are set up for an extremely left-translated reversal within the cycle starting on April 18.  If my interpretation is correct, SPX will join gold in a Panic Cycle that may last approximately 3 weeks.   

The bottom should occur for both indexes during the week of May 20 if this analysis is correct.  The first low of this decline appears to be due on or around May 7.  At that juncture it appears that SPX may take out the November 16 low.  The real panic may begin after a sharp retracement lasting only 2-3 days.

Gold has already entered its Panic Cycle.  The correction to the Intermediate Wave (1) ended at 1484.80 after retracing a little more than 50%.  The retracement ended on a Primary Cycle high on April 26, which is why so many are attracted to buy gold.   The Cycle Bottom resistance (1479.98) has kept the follow up attempts beneath it and will soon become a repellant as soon as buyers realize that they have gone off the cliff again.

Regards,

Tony

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As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

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