I felt it was important to document some patterns in trading that would give myself and anyone family and friends some insight probabilities of how the market(people emotions) will react.
By all means, this is not trading advice just simple study of market behavior from others who have been at this game much longer then I have and dissecting the information to make it understandable.
The False Moves Before The Large Move
In any rally or decline, there is usually a set of 4 knocks(rarely, but sometimes 5) of a certain point before just taking off in that direction of the knock. Look below at some historical data from Martin Armstrong’s study. I find this captivating and enlightening.
The result of the False move is what you can call ‘Knocking on Heavens Door’. If it is a Bull Market, then each dip (false move) rally’s up to knock on heavens door. If it is a Bear Market, then each rally (false move) declines down to knock on heavens door.
Upon the 4th knock (sometimes 5 knocks), we have high probabilities of moving right thru for a large move.
So How Many Knocks As Of Today…
Well, in the DOW we have been literally consolidating. This is good sign of building of energy that will push the market is a huge direction. Below you will see the False moves on the dips… and the Knocks on the top.
It is clear we are seeing the 3rd knock from our last dip. Everyone panicked and most stated it would be a crash. But look at the image of the ‘Energy Negative’ from the model. During the dip in May, the energy model showed it was already extreme in the bottom. This means everyone panicked ALREADY!! So there is no more energy to push it lower.
Thus the only Panic we had was to the upside which we saw these past few weeks.
What To Expect Moving Into 2020 January
While timing is difficult… we do know the following important time frames based on historical data.
- End of June in Seasonal Charts Historically Dips Low on Energy
- Money Managers Sell in October, November to Cook the Books with Profits
- January 2020 is next important timing point for the ECM (Economic Confidence Model)
We Are In A Long Term Bullish Trend In Equities
There is still risk of ONE MORE false move down, after that we have the 4th knock on heavens door. This is when it will open up and keep going which most will not be able to catch it worrying its over bought and just keep going.
False Move May Be The Liquidity Crisis
In order to trade this one would need confidence in what is going on. What I can tell you is when there is NO NEWS and no one knows why a move happens, this causes a panic.
While we have many things happening in the world of finance. Many are not ready for the transition of 51.6 year public cycle (when majority rely on government — started with [Roosevelt and social programs) after 1929 Crash] to the [private 51.6 year cycle (1985 – 2032)] when private corporations were majority and Regan began the elections.
Below is the waves on a chart from Armstrong-studies which visually shows it. It is clear during these time frame when equities rallied or bonds rallied. Depending on cycle we were in, public (gov/bonds) vs private( corporations/equities).
Human Do Not Change Cycles Of The Universe…
IMPORTANT: Note it is never the person/politician that made this happen. It is the cycle of life which no human can control. Thus the ‘7 years of drought and 7 years of plenty’ phrase from biblical teachings. Majority act the same until they understand the concept… thus placing all there wishes into one power structure or government thinking it will change the outcome of the cycle, thats impossible.
If majority believed this truth, politicians would never get elected on their broken promises anyway, unless they knew and worked within these cycles.
Also if majority understood cycles they would know every global warming tax and clean air act is really just above building revenue for entities/government who are creating the law. The universe has an interesting way of cleansing itself and been just fine billions of years prior to us being hear.
Getting Back To A Liquidity Crisis
Since the majority (gov and the people) is NOT ready for this type of thinking and are still basing their thoughts and studies from the public wave. When they believe lower interest rates is good for the stock market. This old thinking is based on the government being the largest debtor from the public wave.
Before 1929, the majority knew raising interest rates meant there was a bid for more capital and rose the stock market. Thus corporations need more workforce and products, thus building more equity in companies.
So the majority are a bit backwards in thinking from old methods without studying these cycles.
What one can expect is when any type of move happens, the big money who has been betting on the public wave (bonds) will have to cover their losses by selling other assets. This will have (for no reason what-so-ever) make a flash crash like we been seeing in the past. Analyst will have no news except to make news up…. and at that time if you know that its due to losses in big money in bonds or other assets and they have to sell good assets like American Indexes (Dow Jones, S&P, and NASDAQ), You will have more confidence in holding your trade or knowing why the move when the majority just panic due to no news.
It could be quite simply people in INTL waters like Europe have a bond crisis and must sell their American Equities to cover those losses. This has happened before and even strong companies see the dip… the companies are not closing up. It’s just dipping down due to big money was wrong in some other bond or asset and selling.
- Majority has been in Public Wave (Bonds / Social Programs)
- We Are In A Private Wave Since 1985, With January 2020 next turning point
- When Public Wave Collapses, Where Does Money Go For Safety — Equities/Dollar/Cash
- Always Understand Liquidity Crisis will Make Majority Wrong On This Trend
- Due to Liquidity Crisis (So Many Wrong having to cover losses), We will see some dip
- Long Term It Appears Bullish… especially into 2032 at its peak
- Follow the cycles… I have no idea on timing… just using data/history to add confidence for your investment strategy.
P.S. Do Not Use this Information for Trading, It’s just a study of history/data. I have no idea when any market will turn but more mistakes we make the faster we learn to avoid that same mistake in the future (a.k.a. Enlightenment).