Weekly Time & Price – W/C 28th April 2014

No reviews this week, just a peek at the GOLD market

Swing File Analysis:

Weekly Gold Price & Time

Daily Gold - Time & Price

These charts were produced using data up to and including Thursday 24th April – I usually do the analysis using full weeks worth of data, I can’t do that this week, hence the partial weeks data use.

Essential material

Ever wondered why trading has such a high failure rate and why when YOU try to trade methods you end up losing?

Because approx 80% of the crap out there does not work! and you buy it!  I am very fortunate that I’ve never been sucked into the scams out there.

I cannot tell you just how valuable that report is, ignore the wave count parts, unless you’re into EW, the real content is contained for free within the document.

Triangles Offer Traders Important Forecasting Information
Find out about 14 Elliott wave trading insights

By Elliott Wave International

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I began my career as a small trader, so I know firsthand how hard it can be to get simple explanations of methods that consistently work. In more than 15 years as an analyst since my early trading days, I’ve learned many lessons, and I don’t think that they should have to be learned the hard way.

The Best of Trader’s Classroom offers 14 trading insights that you can use.

Consider these examples of what you’ll learn:

— Use bar patterns to spot trading setups
— Use the Wave Principle to set protective stops
— Identify Fibonacci retracements
— Apply Fibonacci ratios to real-world trading

Jeffrey also discusses corrective patterns, including the triangle formation. Here’s an edited excerpt:

Triangles are probably the easiest corrective wave pattern to identify, because prices simply trade sideways during these periods. [The graphic below] shows the different shapes triangles can take.

Triangles offer an important piece of forecasting information — they only occur just prior to the final wave of a sequence. This is why triangles are strictly limited to the wave four, B or X positions. In other words, if you run into a triangle, you know the train is coming into the station.

Jeffrey goes on to provide three real-world examples of the triangle price pattern. Here’s one of them with his accompanying commentary.

[The chart above] shows a slight variation of a contracting triangle, called a running triangle. A running triangle occurs when wave B makes a new extreme beyond the origin of wave A. This type of corrective wave pattern occurs frequently in commodities.


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S&P500 Index – Update

OK, recent price action has forced me to update the commentary on the S&P500.

A potential TOP could be in, it is not certain (we need more price action), price taking out the Minor swing low is a potential game changer.  BUT, it ALL depends upon how price action forms and reacts  during the next few weeks.

Look at the chart below (I’ve used this in the last update), there is an equal chance that all is happening is a simple or complex correction from the highs OR that we are within the early stages of a bear market.  I know some traders are saying that’s it the tops in, but they were also saying that on MOST highs in the market!  Like I’ve said in the past, you throw enough predictions and one will hit, it does not mean you’re smart!

1737.92 is now the key and critical level, for me until key lows are taken out such as 1737.92 the odds still favour the upside, but as I’ve mentioned this could be the start of a major downtrend – it is just too early to know for sure.

When we trade, we are guessing, we now need to watch the bounces that will occur, if they are strong then I’d expect price to head higher to sideways, if the bounces are weak in terms of number of bars and price % then the downside might be here – keep an eye on the bounces as they will be critical.

Look at the “bounce” from the 5th Feb 2014 = STRONG

1

You could refine the quality of the analysis in the chart about by placing retracement levels, but I find it simpler to just watch price action and see what it actually does, because that is the most important indicator of all – PRICE action.

Remember I am looking for a +20% correction in the markets this year, I had a Time Cycle date of 29th March 2014 – the HIGH so far came in only 5 days later – the Time Cycle is still VALID.

If we are still within a Deflationary Depression (as I think we are) then 6 year Bull markets just do not happen, they NEVER have in 200+ years of stock market history.  Obviously if we are NOT in a DD then the market is perfectly fine with a 6 year bull market.

 

 

Weekly Time & Price – W/C 14th April 2014

This week we are focusing on the S&P500 once again, but first we need to have a quick review of the EURUSD from last week.

EURUSD (Weekly Time & Price – W/C 7th April 2014):

We were looking for a LOW on the daily chart – in it came right on cue, I’m long the EURUSD, I caught the absolute bottom bar (at time of writing) and the trade is now NEUTRAL, from a risk perspective, well in fact I’m 100+ pips in profit by way of a stop in the market and I’ve also taken a portion of the position off so I know this trade will will produce a minimum of 1R return regardless.

I have no idea if I’m right on this low call or not – Price is in the current expected Price and Time zones as last weeks analysis showed, the WEEKLY chart should ideally punch HIGHER to complete its Price and Time zones, but that’s not necessary – we’ll just have to wait and see what actually happens.  the point is I took a speculative position on the EURUSD follow a signal to go long on one of my trading set-ups, It’s bounced enough to be a profitable trade of which I’ve secured part of those profits, I’d love it to head higher, it might, it might not – that’s the part of the trade that I have absolutely no control over, all I can do is manage the trade to try to eek the most out of it.

When I next review the EURUSD in 2 weeks time we might be hunting for a short-term top, but we’ll see the position for that then.

Right let’s take a look at the S&P500, because it has been having a nice move:

Swing File Analysis:

Weekly S&P500 Time & Price

First we need to remind ourselves that we were looking for a HIGH in the S&P500 from the last Weekly Time and Price analysis – Price is now in both the Price and Time zones to complete a WEEKLY HIGH.

Daily S&P500 Time & Price

The DAILY chart is now looking for a LOW, the decline is in the typical PRICE & TIME zone for a low to occur too, but we can also see the other dates too.

Fibonacci Analysis:

Weekly S&P500 Time & Price FIB

Daily S&P500 Time & Price FIB

 

REPOST: Shocking Facts About The Deindustrialization Of America That Everyone Should Know

Once again many many thanks to our friends at: http://theeconomiccollapseblog.com/ for producing and making this article available.

Major economic problems take decades to build up – the proof is there for all to see.

This has also happened here in the UK, but not on the same size as America.

 

Shocking Facts About The Deindustrialization Of America That Everyone Should Know

Posted: 03 Apr 2014 12:58 PM PDT

Abandoned Packard Automobile Factory - Photo by Albert DuceHow long can America continue to burn up wealth?  How long can this nation continue to consume far more wealth than it produces?  The trade deficit is one of the biggest reasons for the steady decline of the U.S. economy, but many Americans don’t even understand what it is.  Basically, we are buying far more stuff from the rest of the world than they are buying from us.  That means that far more money is constantly leaving the country than is coming into the country.  In order to keep the game going, we have to go to the people that we bought all of that stuff from and ask them to lend our money back to us.  Or lately, we just have the Federal Reserve create new money out of thin air.  This is called “quantitative easing”.  Our current debt-fueled lifestyle is dependent on this cycle continuing.  In order to live like we do, we must consume far more wealth than we produce.  If someday we are forced to only live on the wealth that we create, it will require a massive adjustment in our standard of living.  We have become great at consuming wealth but not so great at creating it.  But as a result of running gigantic trade deficits year after year, we have lost tens of thousands of businesses, millions upon millions of jobs, and America is being deindustrialized at a staggering pace.

Most Americans won’t even notice, but the latest monthly trade deficit increased to 42.3 billion dollars

The U.S. trade deficit climbed to the highest level in five months in February as demand for American exports fell while imports increased slightly.

The deficit increased to $42.3 billion, which was 7.7% above the January imbalance of $39.3 billion, the Commerce Department reported Thursday.

When the trade deficit increases, it means that even more wealth, even more jobs and even more businesses have left the United States.

In essence, we have gotten poorer as a nation.

Have you ever wondered how China has gotten so wealthy?

Just a few decades ago, they were basically a joke economically.

So how in the world did they get so powerful?

Well, one of the primary ways that they did it was by selling us far more stuff than we sold to them.  If we had refused to do business with communist China, they never would have become what they have become today.  It was our decisions that allowed China to become an economic powerhouse.

Last year, we sold 122 billion dollars of stuff to China.

That sounds like a lot until you learn that China sold 440 billion dollars of stuff to us.

We fill up our shopping carts with lots of cheap plastic trinkets that are “made in China”, and they pile up gigantic mountains of our money which we beg them to lend back to us so that we can pay our bills.

Who is winning that game and who is losing that game?

Below, I have posted our yearly trade deficits with China since 1990.  Let’s see if you can spot the trend…

1990: 10 billion dollars

1991: 12 billion dollars

1992: 18 billion dollars

1993: 22 billion dollars

1994: 29 billion dollars

1995: 33 billion dollars

1996: 39 billion dollars

1997: 49 billion dollars

1998: 56 billion dollars

1999: 68 billion dollars

2000: 83 billion dollars

2001: 83 billion dollars

2002: 103 billion dollars

2003: 124 billion dollars

2004: 162 billion dollars

2005: 202 billion dollars

2006: 234 billion dollars

2007: 258 billion dollars

2008: 268 billion dollars

2009: 226 billion dollars

2010: 273 billion dollars

2011: 295 billion dollars

2012: 315 billion dollars

2013: 318 billion dollars

Yikes!

It has been estimated that the U.S. economy loses approximately 9,000 jobs for every 1 billion dollars of goods that are imported from overseas, and according to the Economic Policy Institute, America is losing about half a million jobs to China every single year.

Considering the high level of unemployment that we now have in this country, can we really afford to be doing that?

Overall, the United States has accumulated a total trade deficit with the rest of the world of more than 8 trillion dollars since 1975.

As a result, we have lost tens of thousands of businesses, millions of jobs and our economic infrastructure has been absolutely gutted.

Just look at what has happened to manufacturing jobs in America.  Back in the 1980s, more than 20 percent of the jobs in the United States were manufacturing jobs.  Today, only about 9 percent of the jobs in the United States are manufacturing jobs.

And we have fewer Americans working in manufacturing today than we did in 1950 even though our population has more than doubled since then…

Manufacturing Employment

Many people find this statistic hard to believe, but the United States has lost a total of more than 56,000 manufacturing facilities since 2001.

Millions of good paying jobs have been lost.

As a result, the middle class is shriveling up, and at this point 9 out of the top 10 occupations in America pay less than $35,000 a year.

For a long time, U.S. consumers attempted to keep up their middle class lifestyles by going into constantly increasing amounts of debt, but now it is becoming increasingly apparent that middle class consumers are tapped out.

In response, major retailers are closing thousands of stores in poor and middle class neighborhoods all over the country.  You can see some amazing photos of America’s abandoned shopping malls right here.

If we could start reducing the size of our trade deficit, that would go a long way toward getting the United States back on the right economic path.

Unfortunately, Barack Obama has been negotiating a treaty in secret which is going to send the deindustrialization of America into overdrive.  The Trans-Pacific Partnership is being called the “NAFTA of the Pacific”, and it is going to result in millions more good jobs being sent to the other side of the planet where it is legal to pay slave labor wages.

According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent offshore over the next two decades if current trends continue.

So what will this country look like when we lose tens of millions more jobs than we already have?

U.S. workers are being merged into a giant global labor pool where they must compete directly for jobs with people making less than a dollar an hour with no benefits.

Obama tells us that globalization is good for us and that Americans need to be ready to adjust to a “level playing field”.

The quality of our jobs has already been declining for decades, and if we continue down this path the quality of our jobs is going to get a whole lot worse and our economic infrastructure will continue to be absolutely gutted.

At one time, the city of Detroit was the greatest manufacturing city on the entire planet and it had the highest per capita income in the United States.  But today, it is a rotting, decaying hellhole that the rest of the world laughs at.

In the end, the rest of the nation is going to suffer the same fate as Detroit unless Americans are willing to stand up and fight for their economy while they still can.

How to play the next market cycle

This is more strategy that anything else and it will appeal to the buy and hold investor more than the trader – the aim of the game is to make money, the easiest way to do so is by being a Buy and Hold investor.

STOP – don’t get me wrong, I’ve slated B&H Investors in the past, with good reason, because there’s the right time to be a B&H Investor and there’s a wrong time.

What could be easier than Investing, monitoring and doing very little whilst your money explodes higher? Nothing, it’s the easiest way to make massive money, It is the cycle that breeds the “I’m an expert Investor” types – let me enlighten you, “expert” investors don’t lose money during bear markets! That’s when you know if you’ve got it or your a sham that got lucky riding a wave that only went up.

Think back to 1999, I can name handfuls of experts, some of them bricklayers, window cleaners and call centre operators who were Investment experts, Until the market cycle changed, the very same market cycle that they did not have a clue existed.

Today, I read somewhere, on a book cover I think about a UK prominent Investor who advocates the buy and hold strategy, through extensive company research and selection, then I read that he started out with £120k in 1982, turned it into £1 million in 2000, lost 40% of it in 2008 and so on.  Very impressive, actually money, actual returns and management of portfolio, you cannot know the overall outcome because he’s achieved what many of us set out to do.  BUT, although impressive, we need to examine what he’s done, by complete accident and without knowledge of market cycles:

  • In 1982 £120k was a massive amount of money
  • 1982 the 18 year bull market cycle started
  • He’s taken a 40% hit on a multi-million pound Investment portfolio in 2008 and the other years since 2000 weren’t that fantastic (the market cycle changed in 2000!)
  • So £1 million in 2000, starting at £120k 18 years prior = approx. 735% = 40.83% average annual gain
  • Impressive returns

Let’s now take a look at what would have happened if we’d of just bought the Dow Jones Index unit trust/tracker/ETF of the time with £120k in 1982 and sold in 2000, because we HAD knowledge that a 18 year upwards BULL market cycle should be on the cards – no skill, just buy and hold for the entire length of the assumed market cycle:

  • Dow level in 1982 = approx. 1000 points
  • Dow level in 2000 = approx. 11000 points
  • Gain = 10000 points approx. (you’d of never bought the low and sold at the highs)
  • = 1000% gain in 18 years = 55.55% annually on average
  • Includes the “shock”1987 crash, the other crashes in the 90’s
  • So let’s keep the maths simple and apply 1000% to our £120k = £1.32 million over 18 years

So just by buying and holding at the right times, we’ve beaten a system that someone has spent hours per week researching, tweaking and monitoring AND probably fretting about.  Just by buying and holding the Index at the right time you can replicate results out there and in some instances beat them.

What would you of done since 2000, when the market cycle changed? NOTHING, you’d have stayed out of the market in CASH – in all reality you’d of probably risked a little in 2003 and 2009 but it’s not necessary

What returns should you expect from the next market bull cycle – I’ll be looking for very similar % returns of 1000%+

Before we all get excited, the next bull cycle is still a few years away as yet!  So you’ll have to be patient.

A very basic strategy would be to go long the S&P500, Dow or Nasdaq or a combination split at the right time and just leave until the right time to sell, but rather than calling yourself an Investment Expert, just acknowledge that all you’re doing is exploiting and riding the market cycle rather than having super star abilities of picking fantastic stocks.

I have a smallish pension fund that I plan to use this idea on, this will be the ultimate set and forget, as my retirement date is smack back at the predicted start of the next major down turn.  I plan to go long in the IUSA ETF and the LUK2 ETF, equal split 50% each of my fund  on any of the following conditions:

  1. A 30-50% fall in the S&P500 during 2014 or
  2. A 15% fall during 2016 or
  3. I’ll take a long position in December 2016 regardless (unless already invested)

I’ll be doing the same for my children’s invested funds too – It’s now time to start thinking about being long, long, long the stock markets.  I’m perfectly happy to just sit in cash until December 2016 if the market does not comply with my demands.  This is potentially a 3 year wait, but I have my plan in hand and it will executed once the market is in position or time runs out.

I realise that this goes 180 degrees against what I’ve previously said about risk/money management – I’ll still be trading but with another account and to be honest in that other account I’ll be employing buy the pullbacks once a definite bull trend is established.

The pension fund is planned just to set and forget, if after I buy it falls 80%, so what, I’m happy to accept that risk as I can’t get at the money for a few decades anyway so it does not matter if it lingers for years underwater, at some point it will come back and if I get it wrong I’ll have to scramble to build it up in the 2020’s.  If the USA markets follow 200 years of historic price action, the markets will at some point be flying upwards – I think that point will start late 2016

In the meantime it’s still a traders market.

Weekly Time & Price analysis – W/C 7th April 2014

Hi All,

This week we come back to the mighty S&P500, I’ll provide a update to what to look for going forward in this post too.  But first let’s look at last weeks Call for the EURUSD.

We were looking for a LOW, in fact the time zone runs to the 18th April 2014 for a LOW point – so we are still within that zone in both Time and Price.

Right the S&P500, lets review the Price and Time zones and then look at the market itself from a technical point of view

Swing File Analysis

Weekly EURUSD - Time & Price

Projecting the END of the UPSWING on the WEEKLY EURUSD – in the zone now

Daily EURUSD - Time & Price

DAILY Analysis = looking for the LOW of this swing DOWN, again in the ZONE!

Fibonacci Analysis

Weekly EURUSD - Time & Price FIB

Daily EURUSD - Time & Price FIB

DAILY Analysis = Fib counts/analysis says Tuesday 22nd April has the highest number of hits – wait and see.

What to look for going forward – update:

S&P500

WTLFGF1

Look at the chart above, to be honest the critical information is shown on the chart, my words here are just to explain the detail in plain English so that my thoughts are clear.

The PINK horizontal line = a current SUPPORT shelf, If and how long it hold I have no idea (neither does anybody else)

ALL the moving averages are in Bullish mode, pointing up and separated nicely = UPTREND

The PINK moving average gives the impression that price found support at that level – it did, but the support occurred at the PRICE level NOT the moving average – think, on the days of support the moving average was one bar back, PRICE drags the moving averages along, the moving averages do NOT drag price – this is a classic ILLUSION to which people will say “Look, price found support at the MA level” It’s not true, it just happens that the MA met with price at those levels – why did the MA FAIL to support price in June 2013, August 2013, October 2013, Dec 2013?  BECAUSE price found support and the MA was not priced near enough to create the Illusion AND even if it were true that moving averages provide support NO-ONE can tell you in advance WHY or WHEN it will next happen, so there value is pretty limited in my book – BUT they [Moving Averages] are good at helping you see and identify the trend direction, although you could just get a line draw it on the chart and determine if it;s heading sideways, down or up and that would be just as good.

In Fact I will do a series on Trend Identification in the coming weeks

The Thick BLACK horizontal line is CRITICAL SUPPORT – If that level is broken – POTENTIALLY – the trend could have changed from UP to DOWN, BUT, that is not for certain – IF that happens it will be the biggest correction for a number of months – W.D. Gann said that when the size and time of a correction exceeds those of the past corrections in the trend watch out for a trend reversal – that’s exactly what we will do – KEEP WATCH.

You can see from careful study of the DAILY chart that Gann’s quote so far has FAILED – so far the largest corrections in Time and Price have FAILED to be reversal points!  Another “Market FACT” that in fact is a MYTH!  At some point Gann’s quote will come true, but I wonder after how many FAILURE POINTS!  (I reckon about 80% of what you learn about the markets is a load of crap – Elliott Wave and Gann included) But I also say that PARTS of Gann and Elliott Wave are genius and workable.

We now need to look at this S&P500 market in a different context – a higher time-frame chart to see the bigger picture – detail on the chart should be self-explanatory

WTLFGF2

Once those KEY support levels start to be taken out all you can do is watch to see where the market will find support – no-one knows where it will find support, people will try to guess such as 61.8% fib level of X-X, or 50% (not even a FIB level!) of X-X – but they never tell you EXACTLY which levels will provide the resistance or which high and low to work off, that’s because they DON’T KNOW, it;s all ifs and buts in the markets – at least I’m honest about it!

For me the crucial support levels are the ones I’m watching anything up to them is just market noise and a standard potential correction in progress.

Just remember that NO-ONE, me included knows exactly where and when this market will top or bottom out – If you throw enough guesses at the thing eventually you’ll get it right! BEWARE of predictions.

Oh and another point, people keep bleating on about QE1 turning the market in 2009 – QE1 was an accounting trick – no real money entered the markets! So how that managed to pump the market higher I’ll never know, if markets can rise on fresh air all we need is a giant fan aimed at the markets with a hint of QE rumour and they should propel ever more higher.

What to Look for going forward the next part will be posted in a month or so time – until that uptrend changes to do guess what the trend direction is?  Up that’s right

Hope it helps.

 

ALWAYS check

You must ALWAYS check and question trades that don’t seem to have been handled well or you don’t think price reached a certain level.

You know the story about brokers knowing where your stop is and then taking it out? Well I just stopped out of a trade at a price above where my stop was placed!  I looked at the chart, price NEVER traded at the stop price, so I questioned the broker, asking for proof that price traded at the level of my stop – Price NEVER traded at that level!  So my broker is being forced to re-establish my trade and they’ve kindly thrown in £50 worth of free trades!  Wow!

Here’s the details of the trade:

Bought 1870 shares @ £6.744426 on 24th March 2014

Sold 467 shares @ £6.83, leaving 1403 shares

Moved stop-loss to £6.75 (price now trades @ £6.77, but never touches the stop)

Stopped out!  Made a £82 profit on the trade, BUT, I’ve been stopped out unnecessarily and I should still have 1403 shares live in the market.

The current market price is now £6.9525 and I would have had a stop placed @ £6.92

So if I’m stopped out now the profit on the trade will be approx £280 rather than £82!

Let’s say this happened 5 times a year = £1k+ of lost profits

You have to check each and every trade you take to make sure it’s processed properly.

I’m always checking trades, a few £’s here and there of mis-priced trades can add up over the year.

At this stage I have no idea WHY this mistake happened, my priority is the trade at this precise time, but I’ve asked my broker to provide a full explanation which I’m sure I’ll get in due course.

But this shows you just how important checking your trades and record keeping is – that money is best in MY account and not my brokers account or lost in the ether.

 

 

 

 

Update on Time Cycles

I’m writing this post early Thursday 3rd April 2014, I’m writing it assuming that the March 29th 2014 market cycle I’ve previously talked about has FAILED/NOT WORKED – If over the next 2 days the markets commence a multi-month sell-off then I’ll have to revise this post with the data

We will still have to watch Thursdays and Fridays market action but if the market continues UP then we have to take it on the chin and assume that the cycle has had no effect on the market. (I’m looking at the S&P500 Index).

If you’re like me these Time Cycles are not essential to how you trade, they are there in a what if scenario, something to be aware of and act on if it becomes obvious a turning point is upon you etc.

For me that’s pretty much it now for the rest of the year on cycles, there’s a couple of minor ones during the summer and another expectation on something different from summer – October time.  I’ll not mention them here, I think I have mentioned them in other blog posts but they are minor and I’m not basing too much on it.  Students know about the October cycle.

Did I trade the March 29th Cycle?  Nope.

I’m truly hoping that if you’ve been following my cycle analysis you’ve picked up on something – it CANNOT be relied on to tell you every twist and turn of the market – that I’m afraid is impossible – anyone thinking “Well Elliott Wave can tell me that” – no it can’t, if it could they’d be no need for alternative counts, EW is good, but it is not precise and never will be.  As I’ve mentioned many times before it;s probably the best thing out there for labelling waves correctly in hindsight, but even as we speak the EW experts have recently had to alter their wave counts to suit market conditions!

Let me be real clear on this, NOTHING and I mean NOTHING works precisely in the trading world.

Looking forward:

Well first let’s look backwards – the 2000, 2002, 2007 & 2009 market cycles came in bang on time.  The 2013 cycle sort of worked but so far the chart (S&P500) says it didn’t, that MIGHT change when we have much more price data available on the charts.  Referring to the May 2013 Time Cycle a 7.5% drop was not enough for my liking to confirm the cycle – it MUST make a print on a MONTHLY chart that is noticable and May 2013 was not – If you view the same date on the FTSE100 Index then you can see the effect it’s having on the FTSE100 Index ( sideways trading range for nearly 12 months!)

1

As you know the above Time Cycle was due between May 20th-28th 2013 and it came bang in to the day, I was hoping this effect occurred on the S&P500 chart rather than the FTSE100 but I trade both so no problems for me, but those in the USA that just focus on the S&P500 it is a problem as that market has continued to RISE.

Moving on, the next set of dates are in mid 2015 and then end of 2016.  the most important of those being the 2016 date.

If I threw enough time cycles on the chart one would hit, to me that’s not accurate, I want virtual exactness, the 2016 date should be a LOW and it should be pretty accurate, however, the 2017 date could also impede the 2016 date a little – either way 2016-17 should be a LOW point in the market.

This cycle has been pretty much spot on for over 200 years

1

I’ve coloured the 2016 date RED – for me this signifies something and makes the date stand out.

2

There is no way to know how or If a Time cycle will act or comply with a possible date until it happens, this means you have to have a suitable way to trade whatever happens.

My outlook for the year 2014 still remains up into the general March area and then either sideways or down into October and then up around October time for the year end.

My outlook from now until 2016 is still sideways (preferred outlook) or outright bearish.

BUT whatever actually happens I’ll be trading as per my rules of trading, not based on hope or assumptions.