Market Turning Points | Andre Gratian | 2011-10-01

From Safehaven.com:

The 3-yr cycle is ideally scheduled to make its low next week and it has brought unrelenting pressure on the market over the past few days. This is why rallies have failed to hold, and why selling is intensifying. We are getting closer and closer to the day of reckoning!

Here is what I wrote in my last newsletter: “The SPX made a double-top at 1220 that created a pattern on the Point & Figure chart from which we can estimate the extent of the decline by taking a count across the 1195 line. We come up with two well-defined targets: One to 1080, and the other to 1040. These are closely correlated by Fibonacci projections. With the 3-yr cycle low about a week away, we could not ask for better conditions to predict the intermediate low.”

In our dualistic world, there are two equal and opposite sides to every event: one positive, and one negative. In Asian philosophy, this is known as the yin-yang principle. The bad news about the current market condition is that if everything happens as it “should”, the SPX will experience another 80 to 100-point plunge into next week. The good news is that afterwards, it should start another intermediate rally which is likely to last into 2012.

Do not forget, however, that what has transpired in the market since May is most likely only a rehearsal for the next market which “should” take place over the next 3 years! Right now, we are only dealing with a 3-yr cycle. In (October ?) 2014, we will witness the bottoming of the 120-year cycle, a phenomenon that no living human has ever experienced. At this time, it is too early to predict exactly when this grand finale will start, and logic tells us that it will not be 40 times as bad as the 300-point decline from 1370 into next week’s suggested low of about 1060, but it should be bad enough. Current estimates are for the SPX to bottom between 700 and 800, but we will have plenty of time to refine this projection.

There is always the possibility that the market will fool us and that the SPX will hold above 1101. If next week fails to bring the significant weakness that is contemplated, bears be careful!

Continued

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