Large Sell-off In Stock Market Looming

About every 20 weeks or so there is usually a noticeable sell-off in the stock market.

We had the October 15, 2014 low followed 20 weeks later, in mid March, 2015 by a low, which was followed in late August (the 24th) by that low. Then roughly 5 months later on January 20, 2016 by a low, then June 27th and now November 2016.  The March 2015 low was a shallow, skipping low as was June 27, 2016 (the Brexit low).

November 2016 also represents the 8-year cycle low due from November 21, 2008. Wednesday of next week is exactly 40 weeks from the January 2016 low, so it is due. The 20 week lows are subdivided by 5 and 10 week lows last seen 8/2/16(five), 9/12/16(ten) and 10/13/16(five). The ideal 10/20/40 week low is due Nov 21, 2016 +/- one week.

The e-wave notations on the SPY chart suggest a bearish inverted WXY “Y” wave with a “Z” wave to come. The “Z” wave subdivides ABC. We are almost through with Wave B (wave y of B, October 25th near 2169?) and as you can see on the SPX chart below it is snapping back to the large Rising Wedge pattern.  Waves w and y of B look to be equal in time (a rally of 8 trading days), which fits the Equality of Waves Principle.

I believe that Wave “c” of “Z” will likely subdivide into 5 waves down, with Wave 1 October 25-28, Wave 2 October 31, Wave 3 October-November 4th and Wave 4 November 7/8 down into November 14 completing Wave 5.

Bradley turns are due 11/3(lo), 11/15(lo), 11/25(hi), 11/29(lo).  TLC low turns are due 10/28, 11/4, 11/14, 11/17 and 11/29. I’m drawing a parallel to Dec 29, 2015-January 20, 2016 and then into February 11, 2016 (Dec 7th, 2016?).

My translation of all this suggests to me that the first wave down will likely be a shallow one (based on the tightness of the Bollinger Bands), breaking slightly below the 2114 recent low by the end of the month and rallying marginally into October 31. I don’t know the cause here, but suspect war tensions  with Russia over Syria and the election (or related news) along with technical problems with the expected rally.

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Chee Hin Teh 4 years ago Member's comment

thanks for sharing

Brad Gudgeon 4 years ago Author's comment

We got out of our short positions in GDX today for a nice profit. We are short the SPX at 2151 expecting at least 2130 on Tuesday and a possible 2113.