If you’re concerned about the stock market and interested in the more experimental/theoretical trading systems work I’ve been playing with over the years, here’s a possible fun one I started writing out and planning for last month…
(clickity click for full size)
Long version:
I’m normally opposed to long range “eight ball in the corner pocket” attempts on anything anymore let alone the S&P 500 (SPX) but prices have obviously been in a consolidation coil phase, we’re arguably in need of a decent sized correction (Monday’s drop everyone was buzzing about was merely a good start), and the chart ranges have tightened to the point of a blow out expansion spring phase like any minute now.
I noticed this a couple of months ago though I didn’t get around to finalizing historic dates until last week. But, of the past 5 times in 23 years that this particular time cycle setup has happened, prices dropped a particular way in price and time on each event.
A stock market drop from 2% to 19% with a likely mean to median of 9% to 11%.
It won’t be a couple hundred years from now until there will be enough price data to support this particular occurrence as probable but I’m excited to see what happens this time around (even if it inverts and rallies instead – which I doubt to an extreme).
Based on this chart/cycle occurrence alone, here is one guess. Again, this is just a guess! Just for grins based on one aspect of this research so in no way are these particulars anything better than anecdotal:
Starting early 3rd week of July?
If it’s going to happen at all like historic, I’m guessing a 100-400 point drop to most likely begin about Monday July 13, 2015 give or take 3 or 4 trading days (forecast as of 6/17/15).
Likely well under 250 points over the course of a month if at all. But, we’re at all time market highs without well tested support levels and that makes a potential correction even more interesting.
If drop transpires, bottom will be found by middle of August (8/10/15 approximately). Quite possibly that bottom will be retested at least once after a bounce rally but, depending on the drop (if there is one), it may just rally on the daily charts back up to July Week 1 levels about October. Long awaited volatility and retest of August lows first somewhat possible, too.
Today’s S&P500 was 2075ish and price action on the daily chart is currently moving with an upward bias for the next couple of days. Possibly with a revisit near to 2100 before a drop. The next turn down would time in just about right.
Next major support levels are approximately 2040, 2010, 1980, 1900, 1885, 1820, 1740.
If I were to guess a target based on major supports, the 1980, 1900, 1820, and 1740 support levels stick out the most.
Of course, again, even still it may invert and rally instead… but it doesn’t look like an inevitable big move one way or the other will here (considering how momentum is setting up well for a decent sized drop already).
As always, however, trade the price action that’s there and not the moves you want to see. Price action is about to “Post QE” move like it hasn’t in a while and it would be very, very, very, easy to get your head torn off in the subsequent volatility.
The fun part?
As we move nearer to that July date, I should be able to tell when the reversal toward downward momentum is preparing to transpire. In fact, it should confirm by 2pm central the day before price action goes bearish (and I’ll do my best to remember to update accordingly) so subscribe via facebook because I don’t intend to edit or remove this forecast be it accurate or otherwise.
Facebook subscribe:
http://facebook.com/williamstarrett
Short version:
Under one of the more experimental models I’ve been developing over the years, the S&P500 may be 100 to 400 points higher on July 10 than August 10 but don’t worry, it should see at least these highs again soon before a major crash.
P.S. This analysis ignores everything to do with Greece or any news, fundamentals, etc. Should this drop transpire, it’s always amusing to see what the news blames cyclical price action movement on… the next time cycle related setup like this will happen under unknown conditions, likely after a rally to somewhere and subsequent consolidation, summer 2019.
September 4, 2015 UPDATE: FORECAST SUCCESS
As you can see, the forecast was successful.
You can see the play-by-play here:
https://www.facebook.com/williamstarrett/posts/10206933319751415:0
Using the 8/24 low.
SPX high 7/20/15 — 2132.82
SPX low 8/24/15 — 1867.01
Drop 265.81 (12.46%)
NDX high 7/20/15 — 4694.13
NDX low 8/24/15 — 3787.23
Drop 906.90 (19.32%)
Final Result:
https://www.facebook.com/photo.php?fbid=10207425528816334&l=1cdc3c6345
2019 UPDATE: THE SECOND AND FINAL FORECAST IN THIS EXPERIMENTAL SERIES…
Gladly, here, I can log another successful forecast for this one experimental trading system.
This most recent minor correction, as forecasted in the aforementioned original July 2015 post, and again later on July 1, 2019 in the facebook post below, the price action was near to what was anticipated and was just substantial enough for a few days of reporters’ speculations in the news.
| SPX | ||
| high | 7/26/19 | 3027.98 |
| low | 8/5/19 | 2822.12 |
| Points | 205.86 | |
| Percent | 6.799% |
| NDX | ||
| high | 7/26/19 | 8027.18 |
| low | 8/5/19 | 7356.27 |
| Points | 670.91 | |
| Percent | 8.36% |
| DIA | ||
| high | 7/16/19 | 273.99 |
| low | 8/7/19 | 254.38 |
| Points | 19.61 | |
| Percent | 7.16% |
July 1, 2019 Update:
https://www.facebook.com/williamstarrett/posts/10219147666822458
Too fun. Anyway, that’s all for now…
The rollout of the quant product mentioned in the original post’s promo(s) had to be suspended due to the ongoing issues that I’ve had with the Department of Defense et al. While the next handful of forecasts and a few cool AI related ideas are fairly well in place for the eventual road ahead, I have no further updates or announcements particular to this experimental/theoretical markets research planned at this time.
The pendulum always swings so please make sure that you are signed up for email updates so you can be notified upon change. You can do that here.