T3 Live
Shares

Is the 18-Year Cycle Giving Traders Whiplash?

Shares

Is this a bullish Backtest or a bearish Bouceback?

Was yesterday's pullback to the 50 day and a 505 retrace a bullish backtest?

Given the underlying strength in many leadership names that were shrugging off Tuesday's decline that may be the case.

The bear case is a bearish bounce back that may even see a false breakout to new highs as occurred in the triangle from the year 2000.

See the SPX charts comparing the triangles  from 2018 and 2000 from the morning report:

On the daily 2018 chart I have drawn a descending trendline from the high before the Island Top in late Jan.

Notice how connecting the March recovery high ties to the late May high.

At the same time a trendline precisely connecting the January high and the March high tie to yesterday's lows for a potentially bullish backtest.

If the pattern from 2000 is in play we may see a breakout above the May highs. If the market then falters back below the upper rail of the trendline we could be in a plunge phase which would indicate a break below triple bottom support as occurred in 2000.

The whiplash in 2000 mirrors the whiplash this year so being agile in positions and opinions will pay dividends.

Interestingly, confirming the idea of an 18 year cycle is that 9 years from 2000 was the major 2009 low.

A high to low to high cycle may be on the table.

Get Jeff's $50+ Book for FREE:

>> Jeff Cooper's Hit and Run Trading <<

Leave a Comment: