Friday, February 29, 2008

And a top it was!



The long standing symmetric triangle on the $NDX and other indexes appears to be breaking out to the downside on volume. Notice the QQQQ chart showing the volume breakout (breakdown) and the failure at the exponential trendline...
Notice the Bollinger Bands on the QQQQ chart are "tight", this gives a fairly high probability of an extended move down. It could be good to be short here, in other words...

As speculated on in an earlier post, the 2/29/08-3/03/08 turn date has inverted, and rather than a cycle bottom, has become a major top...

In the $NDX, a hint of a top associated with a high trendline.



With the futures down this morning, and with the $NDX leading downward yesterday from it's trendline, and with the 3/3/08 turn date very close now, a hint that this turn date is a top, not a bottom...today and Monday should confirm what's happening...

Tuesday, February 26, 2008

Trendline Charts as of the close of 2/26/08



Some appearance that price is stalling at current "higher" trendlines...That said, it should be noted that daily MACD is headed up rather strongly, so a bounce may well be in progress...

Monday, February 25, 2008

Interesting Juncture



$TRIN is getting low, not only instantaneous readings but 8 period averages, however the $NDX trendline chart could be interpreted as an exponential trendline failure, as the price action has passed fairly far through the trendline without reversing. The $SPX chart shows it's price action just at it's exponential trendline, and still subject to reversal, by that method. The fact that the $NDX rose less then the $INDU and $SPX should be treated a little skeptically, as most advances are led by the $NDX. That said, there are really mixed signals occuring right now. March 3, is still a date of some importance as Fibonacci time lines, Exponential time nodes and cycles all bottom on that date, however the $SPX looks like it may have broken out of it's symmetrical triangle formation to the upside on ordinary charts and has positive divergence on daily charts.
Although I have been expecting another drop to materialize (and it will eventually), short term, we may be seeing a bounce here, because of the oversold conditions and the cycle bottoms due in a few days. What makes this unusual is that triangles are usually considered continuation patterns, which in this case obviously would mean more declines.
So obviously be careful here, as signals are extremely mixed...I can't say for certain what it will do short term...One last thing of note which may be significant, volume was less on the two day rally in the last half of today then on it's start Friday and earlier today..as $TRIN declines, that could be significant...

Saturday, February 23, 2008

February 29-March 3 decline starts here?

There are a bunch of Fibonacci and Exponential time nodes that align with the days either side of March 1st. Since that happens to be a 10 week cycle bottom, I conceived that as a bottom in the market, up to a couple of days ago. It is now clear something else is going on, I now expect that to be the day of a breakdown out of a symmetrical triangle...Watch for this....

What Friday's late day rally looks like...


Friday's late rally happened very fast, looked like short covering and produced a $TRIN reading of .54 (pretty overbought) and pushed the 30 minute RSI to 56.79 on the $NDX, not overbought, but not far from overbought in a bear market. As the Exponential graph shows, it is just under the trendline that has been respected so far, and a modest further advance could push all of the indicators into solidly overbought territory as it collides with this trendline. Still looks Bearish to me...

Thursday, February 21, 2008

How to read the Spreadsheet Graphs (part 2) Warnings and Signals....


In Technical Analysis, there is a lot of confusion between what are "warnings" that something _may_ happen, and "signals" that tell you that something _is_ happening (and that you should act, it's now time to buy or sell). Beginners are the worst at filtering these two situations and often act prematurely, confusing warnings with signals. With that in mind, I will describe what a warning is, and what a signal would be, with the Exponential Math system.

There are three features on the spreadsheet graphs that produce their information content. Though somewhat obvious, it's worth stating them just to get everyone on the same page. It would be useful to look at one of the spreadsheet graphs I have already published on this blog as you read these descriptions, to familiarize yourself with their features and design.

First is the X axis, often with the label "Time Exponent". These are representations of calendar dates, remapped into a somewhat abstract concept of logarithmic time. You will see that trend change days often align with numbers along the X - axis like .25000, .37500, .50000, .75000, 1.00000, and 1.50000. The 1.00000 and 1.5000 'nodes' are the most common points for the current market swing to exhaust itself, i.e., this would correspond to a date that could become the 0.00000 point on a brand new chart for the next market swing as it is often the exhaustion of the current market swing. A "warning" here, is when the price action approaches one of these benchmark numbers I have listed, and the signal is confirmed when the market changes direction within + or - 1 day of one of those important numbers on the X-axis. The Y-axis is just price, with no modifications.

The second feature is the trendlines themselves. On the spreadsheet graphs, they appear as straight diagonal lines radiating from the lower left and upper left corners of the chart. Numerically their values at these corners reflects the lowest and highest prices of the previous swing up or down. There are three combinations of trendlines, displayed on three separate and otherwise similar charts, and these three charts and their unique mathematical trendlines are labeled 1.272 Crossovers, 1.317 Crossovers, and 1.382 Crossovers. This reflects the fact that the core equations have to be "seeded" with those Fibonacci numbers, alone or in combination, to reveal where along the Exponential expansion the trend changes are likely to take place. Because these three charts are seeded differently, their .25000, .37500, .50000, .75000, 1.0000 and 1.5000 nodes will be offset from one another, and occur on different calendar dates.

Curiously, I found no involvement by the core ratios .618 or 1.618 in this naturally occuring algorithm, Nature doesn't seem to use them in this case as seed ratios, how odd! By the way, the term "Crossovers" was added over time to remind of the importance of watching on what dates the trendlines crossed, as that was often a date of significance (a trend change day). As the trendlines are the second most important feature to watch, in the sense of the intersection of the price line with one of the trendlines, this is a "warning". The signal is when the line representing price action changes it's direction of trend as a result of coming into the proximity of one of the exponential trendlines (this is gradual as the chart is updated day by day, this is after all, slow motion!). The turn may occur when the price action strikes the trendline, approaches it closely, or actually penetrates it slightly and then backs out and reverses.This effect is much enhanced if the trendline contact also corresponds with those points in time I call 'nodes' as mentioned above.

Really, they act just like ordinary trendlines on candlestick charts, the behavior is the same.

As I have already mentioned the Crossovers of the trendlines, a "warning" is when the price action in a trend approaches the time period of the Crossover, and a confirming signal is when the price action changes direction on or after that day, that the crossover happens on the spreadsheet graphs. This is the third feature, or type of warning, available on these charts

The most powerful warnings, which are almost signals in themselves, is a combination of any two of the three warnings above! Watch for these warning clusters, as they delineate important time periods. Because I generate three charts, a 1.272 Crossover, a 1.317 Crossover, and a 1.382 Crossover chart, you will often see a "warning" on any two of these three charts. When that happens, those two will be the charts I publish on this Blog, and will omit the one that provides no additional information.

Not coincidentally, those of you who track and look for overlapping Fibonacci price levels and time clusters should notice a lot of these occuring at the same time when one, and particularly when two, Exponential Warnings happen together, and this also helps confirm these moments as pivotal.. It goes without saying that this method like all methods, will occassionally fail or give false signals, though at a lower rate then most other systems. So it is important to look for confirmation, from your other indicators (overbought and oversold, volume, etc.) and methods before trading, trust no system, including mine, to be 100%. Trade well, but remember the risks, and use good money management....Good luck to all of you!

How to read the Spreadsheet Graphs (part 1) Where the Graph elements come from - How they relate to features on the Candlestick charts.






You can see here above and below the "real data" from a candlestick chart, and the Spreadsheet graph, mathematically derived from it. Note the values of Top and Bottom on each chart, which in this case have values for the $NDX of 2141.08 and 1693.06, respectively. Note also the light blue and yellow trendlines emanate from the Top and Bottom of the previous swing, they are mapped from the "real" chart to the mathematically derived Spreadsheet chart in the same relationship. No, they are not really straight as I have drawn them on the Candlestick chart, they're really curved, I only made them look straight on the Candlestick chart for simplicity of representation.

Bearish it was...




It looks like the wedge was real, and the Exponential Math worked well..after an initial pop up at the open, the Bear returned strongly today...So far we're on track to
fall at least until the end of the month....Notice the collision of price with the downward sloping trendline on the 1.272 Crossover chart, and compare it with yesterday's same chart...

Wednesday, February 20, 2008

What's next?




It looks like a small bearish wedge is forming on the $NDX...You can see on the spreadsheet derived charts, that the price action is just past the 1.000 node on the Average Crossover chart, and the price is scheduled to hit overhead resistance on the 1.272 Crossover chart tomarrow...Both ways of looking at the market, to me, seems bearish...

Monday, February 18, 2008

Logarithmic Time - $NDX - Part 1


Many views of the stock indexes have been created with both normal price plots and logarithmic price plots. Trendlines have been drawn on these to show channels and flags and pennants and bullish and bearish wedges (and so forth). Now to show a new perspective, let's take the $NDX from October 8th, 2002 (major bottom at "0.00000" at the left of the plot) and display it with the price action plotted with the logarithm of time from the 10/08/02 date to the present, and see how it looks.

What you see is the emergence of a new growth channel (with the "overthrow" of the 10/31/07 top at 2239.23), invisible by any other plotting mode commonly in use. If the price action continues to respect this heretofore unseen channel, and if we have, as I believe, a cycle bottom coming up around 3/3/08, well, on that date the lower trendline is at about 1537 on the $NDX..It probably won't get there on this cycle, but there's little doubt in my mind that this channel is probably real...and anyone out there can create a small spreadsheet for themselves to find these hidden trendlines and channels in all stocks and indexes. You merely plot from a major bottom or top, putting price action on a natural log time scale and all normal rules of trendlines and channels apply...

My plot uses a proprietary log scale, which has other very useful properties, but you should be able, with experimentation, to get similar results with more generic natural logs, if your focus is limited to trendlines and channels...

Danger ahead! Watch your bank accounts!

Many Websites and Blogs are mentioning this, I would be remiss not to mention it also, most of the U.S. banks are showing negative net reserves as of a few weeks ago, meaning they are essentially bankrupt right now. This means that the probability that one, two or more of these troubled institutions could fail at any time is fairly high. It would be a good idea to take some cash out and hold it in some place that's safe and unknown to others, in case you find yourself needing operating capital during a time period when your normal bank accounts are not available to you....I'm not being alarmist, this is the logical outcome of the horrific financial condition our banking system, under the tutelege of our corrupt Federal Reserve system, has put itself in. I suggest you follow the link to Cycles News and Views and listen to the audio broadcast there, sponsored by Tim Wood. Excellant to listen to. That's not the only Website talking about this, but one of the best. Also check out the WallStreet Examiner website, also doing a great job of educating the public about the monstrousity that is the Federal Reserve and the great con job that has been pulled/ is being pulled on the American people. Learn what you can, remember, knowledge is power!

Friday, February 15, 2008

Trendlines and Time nodes two days later...


Compare today's spreadsheet generated trendline chart with two days ago...See how the 1.000 node predicted the turn...Same pattern exists on the $SPX chart...The Bearish chart pattern wedges were additional confirmation...

Wednesday, February 13, 2008

The $SPX and $NDX are both at 1.000 Exponential Time Nodes from the last swing down...The rally is probably over!


The .500 , 1.000 and 1.5000 are the most potent Exponential Time Nodes for trend change, and all the more so when more than one index shows up at one of these time points at the same time...As if the two previous images needed reinforcing (they don't!) this is another nail in the coffin of this current rally.....Notice how the price action respects the Exponential Trendlines....Also trend changes occur not only when trendlines are touched, but places where trendlines cross (notice the yellow and red trendlines crossing, and the effect on Price) are also periods of time to watch for...

The Dow Jones has an even sharper wedge, at it's apex already...


This leads one to think the breakdown could be at the open on Thursday, doesn't it? However, wedges sometimes exhibit a tendency called "overthrow" where the normal end of a wedge can be exceeded by some amount, before the price action finally turns in the direction suggested by the type of wedge (Bullish or Bearish) that has formed...so wait for confirmation of the downtrend before you play this...

The market should top, short term, between now and Friday


This developing wedge should break down soon....and down into a cycle bottom around 3/3/08 give or take a day...

Saturday, February 9, 2008

Probably we've had a bottom, but...

Caution is advised...I track a 10 week and 40 week cycle, both of which are scheduled to bottom around March 1st, give or take a few days..this means any rally starting at this time may be unreliable until the cycle bottoms have passed....So I would advise against getting too bullish here...

Wednesday, February 6, 2008


If the market falls below the trendline in the chart below this one, then this chart shows a deeper (yellow) trendline below 1250...fairly consistant with the P&F target...Timing by the higher trendline, I could see a reversal very soon, but by fibonacci days, the most likely targets are Friday and Monday the 11th...

Look for the markets to possibly find a REAL bottom tomarrow, what I think we have is a double bottom comprising tomarrow (the 7th) and January 23... Then wave "B" could start...but if the market falls below 1295-1300 (see the red trendline above..) on volume, the P&F target is 1260 (on the $SPX) which would line up with the '06 bottom..looking at a long range chart, that would be a likely level for a shoulder to form, if it can do that..then look for wave "B" from that level...