IT'S WAKE UP TIME!!!!

Remember to click on the charts to make them bigger

I will show this chart again and again. This chart is the perspective we have to think in when we say the index has fallen enough. Most people have a perspective of a few days although some do remeber the top of 2000. But very few take note of what happend between 1929 and 2007.

The key point is that markets does not behave randomly. They follow certain rules that are not that difficult - the trick is to find which rules to follow at which time or to choose the referens points in Time, since time often is the clue to what will happen. When you find these points in time that markets respond to, you have a chance to figure out what's going on and where you are in the forever ongoing process of market development.

I see these reference points as Energy points. Energy points are the starting point and ending point of a movet. One might also see these point as points in time where cycles start and/or stop.
Often when we research price together with time, we can see that they are connected and if we can find points that are connected in time AND price the probabillity is high that the discovered point really IS an energy point. Hence a starting/stopping point is perhaps better understood as a topp or a botten. How to decide if it's a top or a bottom is easy. If price is trending UP into the point it's going be a top, of course and the reverse is true when we are looking for a bottom. An energy point can also be an acceleration point in time, where price leave it's "normal" speed and either "crash" up or crash "down"

So let's go to the next chart.
What we will do here is to find out if Oct 2007 really was a long term top in the the S&P 500 index - and thus the second top in a Double Top in the 1974-2007 Bullmarket.

In the chart below we will be looking at - initially - four energy points. Three we know and the fourth (2007) we presume. One known point is a a low (1974) one known point is a high (1987) and one known point is an acceleration point (1994), this point easily detected by drawing the red line above the price chart. Where it suddenly bends up, that the energy point

By measuring the time between the 1974 and 1987 point and adding that time frame to the 1994 energypoint we find that an equal time frame to 1974-1987 from 1994 ends at the top in October 2007 - precisely

.
Energy points are also often found at divisions of a cycle by a Fibonacci ratio. 61,8% is such a ratio - well know in art and architecture - it's dividing a cycle into what is known as the "Golden Ratio" (popularized by the Dan Browns book "Da Vinci mystery"). Dividing our cycle by 61,8%, we find the next energy point - the 2002 bottom.

This little time study indicates that the 2007 top is an energy point and that it is related to the 1974 bottom and the 1987 top (which is related to the 1987 crash). We know that an energy point is a top/bottom or acceleration and and since we have been trading up into the 2007 energy point it must be a top (a top being a point where price will not go any higher). This fact is further indicated by the break down through the blue trendline.

So what we are actually looking at is a gigantic possible double top to the 1974-2007 rise. A double top beeing a reversal pattern in that gigantic move. The rejection of moving higher shall, hence be seen in that context rather than even the 2002-2007 move.

To further investigate the true relationship between the points we used in the chart above, we use the same points again. This time we draw an Andrews Pitchfork using the points A,B and C.

What we then get is the blue pitchfork. The middle line is dividing the AB line in half and drawing the other two lines parallel to that line. Hence we are this time using price to determine the figure.

We are then separately drawing the red trendline from point D (the line is not connected to the pitchfork), to bottom C. That line is perfectly matching the lower pitchfork line, further indicating a connection between the discussed energy points. The connection this time is Price.
Another connection is the BC move (fall from 2000 top. It's 70.7% of the DB upmove - and all start/ending points beeing the discussed here are energy points.

To round off the discussion, the move we have been seeing and we may be seeing the few next days should be seen in in the context of a rise from 47 (1974) to 1576 (top 2007)

Let's draw another pitchfork. This time exchanging the 1974 energy point with the 1994 energy point. And we get the Fork below.
Now, note how the rise from the C bottom "travels" within the two lower median lines. And that the 2007 top hits resistance at the line befor declining.

What we will be hoping for is that the lower median line will act as support. However that hope is diminishing, since we yesterday closed below the 23,6% fibonacci support and the thin parallel line to the fork lines.
Next support is the lower line and if that breaks (1340), we are in serious trouble.
Next support levels using the 2002-2007 rise as reference further fibonacci suport levels are marked in this chart.


In effort to further establish support, we draw another pitchfork - this time using the BC points + the 2007 top. This fork looks a little differen, which is because the first point is offset by 50%, a normal procedure, where the pivot (energy) points are close together. As can be seen, we are now resting on the first line and my thought is that we will continue to the central line, which also is the 50% level of the 2002-2207 upmove - a very common support level.
there is also a chance that we will stop at the 28,2% fib level at 1267.

One of these levels will probably be reached by Friday or Monday because of the situation explained later.

Why MOnday?

Well, we have to look at time again.
The most precise way to measure time, as we use it, is to look at the movement of the planets. Man has now choosen the Sun as the refernce of time, but are there other planets that affect time?
The question is - is there precise moments in time where the markets behave in a certain way? And how do we find out? Nowdays it is possible to find out, or make assumptions by monitoring planetary positions (like you monitor the hands on a clock)and compare those positions - or "pictures", since we can visualize the positions with simple computer graphics. And compare these pictures with points in the stockmarket history, visualized in price charts.

Let's look at some pictures.

This is how the planets lined up at the start of the 1974 bullmarket

This is the print at the 2nd bottom of the 1932-33 bottom complex



And this is the actual bottom

Let's move to something we all remember the aug 16 2007 drop

And finally the situation on Monday January 20/21st

Normally the sky looks like this - no patterns whatsoever.

Comming back to the last January picture, the asumption is that it represnts an energy point, like August 16 - hence it will act as a magnet on the indexes and pull ptice down into Friday or Monday.

Since we are (we were when I started writing this blog - we have now broken support levels) at support in the major indexes, such a move will mean that we are breaking out below support. Break outs are most often violent affairs, which is the reason I do not think the down moves we have seen is over - it may be worse to come, but hopefully stop on Monday (temporarely - since we now are in a bearmarket)

Now that we have established that there is a high probabillity that we have seen the end to a 33 year long Bullmarket. Let's see what happened last time, which is the only thing we have to compare with.



And this chart should be a reminder to those who say that the market will alway go up - in the long run.
Well - it depends on you perspective. 18 years is a long run for many people.
Then consider the magic of 72!
Divide the rate of return (like on a bond) with 72 and you have the time it takes to double your money. Rate in Denmark on a government bond is presently 5% (with 15% tax on your pension fund a tax free rate is 4.25% - correct me if I am wrong) 72/4.25=17
it takes 17 years to double your money (+of course what you save in the mean time...)

Now look at the chart again - where will you be in 17 years????????
It's a gamble!
It's only your bank advisor who says stocks are shure thing - long term and I bet he hasn't seen these charts!

Do you like the blog?
And the language is a problem - but probably not the charts.
I am considering doing an English version of my Danish market letter and at least half of it anlyses the US stock market, which is a must in order to understand what is happening world wide. If you are interested in receiving an english version - without the Scandinavian report please send me an email at stickans@live.com and I will send you a couple reports from January and December, where you can see what I do.
12 is an important number, so thats the $ price per month - I am not greedy - I am doing the reports anyway and share them gladly (Scandinavia version is slightly more "expensive" , since it cotains the Scandinavian markets as well.
If I get enogh intested in an English version I should be able to start this weekend.
If you want to see other examples check out "Fearless forecasters" where I have been posting under "stickan". The posts there, of course were in english. http://www.traders-talk.com/mb2/index.php?s=9a379f2d31b0310ae5b0a0bb4233d3ae&showforum=2

I am looking forward to hearing from you