Over the weekend, I was plugging away doing some cycle analysis and found something VERY interesting!
My short and long term models are meant to show the trends in motion, but you have to dive in really deep to pinpoint actual dates and major inflection points. In short, it’s a pretty complex system and requires some heavy lifting.
As I dove deeper into the numbers and patterns taking place, the Holy Spirit seemed to be leading me in the direction of 50-day trading patterns.
Take a look at this…
As I went back and looked at some major turning points in the markets over the past 200 trading, a 50-trading day cycle appears to be taking place.
Cycle 1: 50 Trading Days – Low to High
Aug 24, 2015 to November 3, 2015
- August 24, 2015: Market hits new low at 1,867.01
- 50 trading days later (Nov 3): Makes a new cycle high at 2,116.48
- Gain from low to high: +13.36%
Cycle 2: 50 Trading Days – High to Low
November 4, 2015 to January 15, 2016
- November 3, 2015: New cycle high at 2,116.48
- 50 trading days later (Jan 15): Makes a new cycle low at 1,857.83
- Loss from high to low: -12.22%
Cycle 3: 50 Trading Days – Low to High
January 16, 2016 to March 30, 2016
- Jan 15, 2016: New cycle low at 1857.83
- 50 trading days later (March 30): Makes a new cycle high at: 2072.21
- Gain from low to high: +11.53%
Cycle 4: 50 Trading Days – High to Low
March 31, 2016 to June 9, 2016
- March, 31 2016: New cycle high at 2072.21
- 50 trading days later (June 9): Expect a new cycle low?
Though this cycle doesn’t nail the exact top or bottom, it appears to identify a major market shift beginning to take place. If this pattern continues, we could see a major decline over the next 50 trading days.
As I examined the patterns I saw some clear trends:
Cycle 1: Bottoming phase followed by a STRONG RALLY
Cycle 2: Topping phase followed by a SHARP DECLINE
Cycle 3: Bottoming phase followed by a STRONG RALLY
Cycle 4: Markets appear to be topping, ready for a SHARP DECLINE
This new analysis, combined with both fundamental and technical analysis show me the same thing: We are heading for a MAJOR pullback!
In the current cycle, we can expect a SHARP DECLINE into late May, early June…