Weekend Update…

Sorry for the lengthy comment….
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The stock market has done reasonably well since the cycle inverted on Feb. 5 as new highs confirm that cycle. Financials are doing reasonably well but what got my attention lately is the action in leisure sections like hotels, cruise lines and restaurants. What that means is people are starting to spend money again. When you see stocks like Carnival, Royal Caribbean, Starwood Hotels at new highs it means people are going on vacation. Other stocks that are at new highs are Cheesecake Factory, Darden and even Morton’s which is on a breakout means you have to take notice. Let’s face it; Morton’s is never going to be confused with Jack in the Box. Just so you know, J in the B is not even close to a new high.

What does that tell you?

On the other side of the coin there are literally hundreds of stocks that have given us V shape recoveries since February. I like to see stocks that break out of bases and there have not been enough of those. My concern is the multitude of stocks going straight up means there is some kind of a buying panic going on. Turn on the television and one of the themes is how many people are panicking because they’ve missed this move over the past year. The cheerleaders are exhorting the hordes to jump in and they are doing it! My take is if you didn’t get into the market when you were supposed to no point in doing it now. As traders, there are many different ways of entering a stock but we all know they are talking about the buy and hold crowd.

If you are a buy and holder now is not the time to be getting in. As a matter of fact it could be the WORST time to be getting in. Its time window time again and this is one of the bigger ones. We are 610 days off the top of the bear. But it’s not the only one this week. On Thursday the SPX will be 261 days off the bottom. On Friday, day 262 for the SPX the overall market will be at 615 which is another important number which very few of you know about. The 615 number is taken from the NASA tables as Venus (224.7 days) is .615 of a 365 day year. Don’t think that’s important? From the 87 crash low to the top, the low in the Dow last year is a .615 retracement. No, not .618, its .615 you got that right. Anyway you slice it we have a double dose of fun this week as markets hit new highs.

Of course, with the Spring Equinox this is the time of year when trends can change. In general terms if we do get a turn here because of the time windows and the change of season any potential turn here could be the turning point of the whole year. Of course there is no validation as I write this, but conditions are ripe that if a high is put in, it could be the high for the year. Consider the NASDAQ topped three weeks later back in 2007. So I’m not talking just about this week, I’m talking about the overall market conditions in the next month.

Over the years I’ve realized how important some balance of price and time is to the turn window. There have been many windows which have not validated. Why is that? This applies to a daily as much as it does to an hourly chart. What we are looking for is some squaring of price and time at the window to gain a more powerful pivot. The pivots come as a result of a universal price and time ratio as you’ve seen in my now famous Russell 2000 cracking the Fibonacci code webinar. If you haven’t seen it, I know it’s supposed to be up for 6 months and I think we are about 5 months into it. But we can get a change of direction based on time alone and if that’s all we get, the change of direction is usually short lived. Sometimes we get turns on some bizarre yet simple calculations. Take the Cocoa chart for instance. Over the last 30+ years, the Cocoa market was in a 280 month bear followed by a 109 month bull. Do the math, that adds up to 389 months. Now take 109/280 and what is the answer to that? Get your calculator…

It’s these kinds of symmetries we uncover in our weekend Futures update. But that calculation did throw the Cocoa chart into a new bear market. As we hit this new window the SOX chart is up .314 (Pi) for every hour since the low on February 5. The BKX is up 189.8% (rounds to geometric 190) since it bottomed out last year. It’s also up .1317 points a day and 1317 is 3.60 times a 365 day year. Want to read something strange?

The Russell is now up 336.31 points in 255 days equates to a move of 1.318 points a day. Banks are up .1317 and Russell 1.318. So we have symmetry on several of our important charts.

What does this mean? Conditions are very ripe for an important change of direction. Even the Dollar is ripe for a change. The daily Dollar is now down .1125 points a day off its high and the significance there is double 11.25 and you get 22.50 and again you get 45, all important Gann angle numbers. Given the fact the Greenback is at important median support it’s all lining up. I think these numbers might be a waste if the Dollar weren’t lining up as well. But it is.

On a lower probability there is a chance we don’t get a reversal but a breakaway gap. All of these calculations are designed to do is give us an important reaction point in the market. During the crisis, my windows led to acceleration points, both 233 day windows hitting either at the Lehman BK and the TARP event. We’ve covered that endlessly in this space. But the higher probability is a change of direction going south. Perhaps the lowest probability play here is having all of these time windows this time of year and have nothing happen at all.

The bullish candlestick pattern in TZA is still intact, and the bullish candlestick pattern in $RVX is still intact (did a gap fill of the gap created yesterday). $RUT is lagging the $SPX today, which is a bad sign for $SPX.