Goldtent TA Paradise

Cycles always work reasonably well in determining the Low to Low timing and can also be useful in the Timing for Highs in a Bull Market. When an asset enters a Bear Crash phase, however, predicting Cycle Highs is much more dicey (witness Oil). For the long Gold Bear, we consistently saw 5-6 month Intermediate Cycle Lows after an 8-11 week bounce out of an IC Low. This was typically my timeframe to follow Rambus’s lead and go short.

Stock market Bears, however, often unfold in unpredictable ways and can crash much more rapidly. The top to bottom timing from 2000-2002 was 34 months while the top to bottom timing in 2008-2009 was only 17 months and set a deeper low. So which will it be this time (i.e. rapid crash or a slower grind)? The Elliott Wave principle would argue that the pattern should alternate so EW would essentially predict a slower grind down but we shall see.

In any case, it would appear that we made an IC Low for the SPX on either Jan 20 or perhaps Feb 11th at around 5 months. Based on this pattern, I would expect the next IC Low out 5 months in June/July. That Begs the Question, however, as to when this Intermediate Cycle will top?

One thing I see on my chart is that my current Blue uptrend Fork is quite steep and probably not sustainable. So if Feb 11th was the real IC Low (as I suspect), then I would expect some chop into is a least another higher low to set the lower pivot for my shorter term Trading Cycle Fork that would have a more reasonable slope that might sustain a multi-week rally.

Note how my previous Blue Fork out of the August Low did a nice job of identifying a Cycle top out of the August IC Low. The Fork broke down during the 2nd Trading Cycle which then made a lower TC2 low than TC1 (also signaling that the longer Intermediate Cycle had topped). Then we had two backtests and then Boom (1st backtest on my Blue Fork followed by a back test on the top red line, which was the declining IC Trend line). SPX was Toast!