2017: The Year of Zero Panic… for Now
“Life can only be understood backwards; but it must be lived forwards.”
-Soren Kierkegaard
The Fed said they would continue to tighten and was perceived as more hawkish and the market fell for a half hour before the Fed likely stepped in to support the market while Yellen was speaking.
Today or tomorrow, we should get an idea if there are real sellers around.
Most NAZ names are under selling pressure and were flat or being sold yesterday while ETF's supported the market.
The Decennial Cycle was a major factor in W.D. Gann's forecasts of the stock market.
This refers to years ending in 2 being good lows and years ending in 5 being strong rally years in what Gann called the Year of Ascension.
Years ending in 7 often were marked by panicky selling.
The 100 year cycle is the mother of the Decennial Cycle.
The crisis that began in 2007 was 100 years after the 1907 Rich Man's Panic.
It didn't matter that there were not collateralized debt obligations. The cycles still exerted their influence.
A further 100 years back to 1807 saw major panics in the US and Europe related to trade and war which evolved into depression.
1995 to 2000 marked a runaway bull market.
The same occurred between 1895 and 1900.
Ditto 1795-1800.
However, 2015 was not a Year of Ascension in the stock market. It was more or less flat. Subsequently, the market played upside catchup.
Likewise, 1927 did not see panicky selling.
The result was that the continued ramp in the market into 1929 means that the cycles played an ugly game of downside catchup in 1929.
Likewise, we have not seen panicky selling in this year ending in 7, 2017.
The year is not over.
Did you ever wonder why October has seen so many blood baths in the market?
October is the 7 month (7 symbolizing panic, completion) from the ‘natural' beginning of the year, March 21.
We are going into the 7th month of a year ending in 7.
Tomorrow is the Autumnal Equinox, the day that the legendary W.D. Gann called the day more likely to see a trend reversal than any other day of the year.
Tomorrow's report will examine some of the reasons why Gann thought the fall equinox was so important.
Suffice to say that the days surrounding this particular fall equinox may be the most historic in 6,000 years according to the constellations.
As for the significance of the fall equinox in the markets, there were the October massacres of 1978 and 1979 and the crash of 1987, the mini crash of 1989, the 1997 Asian collapse and the Long Term Capital Market plunge.
Gold stocks topped on September 22 in 1980 which tied to the peak in may oil stocks that year.
(Remember that the all-time high in gold was also in a September in 2011).
Going back further, on September 22, 1929, the Dow Jones Utility Index became the final major average to make high before the Crash of '29.
The lesson there being that money ran into utility stocks after other stocks topped on September 3 that year, but that ultimately there is no place to run and no place to hide when panic hits the tape.
Everything is a source of funds when indiscriminate selling is let out of the cage and the margin man cracks his whip.
In 2008, the markets went into freefall in the days following the collapse of Lehman Brothers. The fall equinox that year marked chaos in the markets when the House of Representatives rejected TARP.
Currencies have seen historic changes around this date as well.
The British pound was removed from the gold standard and devalued 28% on September 21, 1931.
On September 22, 1985, the Group of Five produced the Plaza Accord, which perpetuated a sharp decline in the dollar and expansion of global liquidity.
There was a Black Wednesday on September 16, 1992 when Britain was forced to withdraw from the European Exchange Mechanism.
Treasury note and bond yields made their historic highs in late September 1981. That marked the end of a 35-year bond bear market from the end of WW2.
We have seen a 35 year bull market in bonds since that time.
The beginning of September 2000 was the test failure high in the SPX of its March high that year.
This year we saw an important high in March at 2401 SPX (an important level) and 6 months later the SPX hit 2509… an important range of 108 points 180 degrees later.
We will delve more into the significance of 108 tomorrow but 3 X 360 is 1080 and in Gann and in geometry, you can always move the decimal point.
Three is one of the secrets in Gann's coded novel The Tunnel Thru the Air found on page 69.
Conclusion.
So what is the setup going into this Autumnal Equinox?
The dollar had a big day yesterday and continuation above 93.50 could be a sign of a change in trend.
Alternatively, a failure here should see an accelerated decline in the dollar in October.
Oil is flirting with a breakout over 51 which could see 55. The oil stocks have come to life in recent weeks and our OAS and FMSA swing positions have been working nicely.
Gold has pulled back to test the double tops at 1300. I did not think it would pull back this far, but if a new leg up starts and exceeds the recent highs and 1360, it should mark a strong advance.
So in that respect, this reaction could be simply pulling the rubber band back for a major move.
The semi-conductor stocks saw a sharp break yesterday on issues and orders concerning the new iPhone and watch.
A weekly SOX shows a large range weekly reversal bar on the week of June 6.
The SOX set a new high above the former peak and a quick stab lower will issue a weekly Soup Nazi sell signal.
This is a bull trap of false breakout pattern.
The pattern in the SOX looks similar to the 90 day/degree double top/false breakout in the SPX in July/October 2007… on the Decennial Cycle.