Loading ...Well I called this right if it plays out to watch out starting middle of the month but just by seeing patterns but they looked way back.
A friend sent me this the other day but was too busy to read it so found time just now not knowing there were charts I could read fast. I don’t know where she got this since she doesn’t read charts or involved in the market.
I can’t post the charts on a pin just so you have to read it. If you don’t want to read it fast forward to the end.
Market action over the past three weeks continues to provide evidence of an imminent market crash. Yet, the exact form of the crash remains complex with multiple scenarios still viable. Equity indices such as the S&P 500 (top of page 2) and NASDAQ have generally weakened over the past 12 weeks. For most investors and analysts, the modest decline in the major averages since early August seems unalarming. Yet, numerous secondary indices, along with many technical indicators, reveal ongoing deterioration far more concerning than that shown by the major market indices. Unlike the S&P 500, the Russell 2000 Index (middle of page 2) barely rallied during the past two weeks, while the Russell Microcap Index (bottom of page 2) fell to a 3-year low today. Likewise, the Composite Advance-Decline Line (top of page 3) closed near a 4-year low today.
From a technical perspective, the NASDAQ 20-day Arms Index (middle of page 3) has moved from a neutral position a month ago, to overbought territory this past week. Similarly, the NASDAQ 25-day Gaussian Kernel RSI (bottom of page 3) has moved from moderately oversold 2 weeks ago, to high-neutral today. The ratio of the Equal-weight S&P 500 relative to the published S&P 500 (top of page 4) illustrates the massive deterioration in mid-cap stocks relative to large-cap stocks. The ratio is rapidly approaching a 14-year low, with the prevailing signal exactly opposite to that of late-2008 to early-2009 – when the ratio bottomed in November 2008, which was well ahead of the large-cap low recorded during March 2009. The composite oscillators also remain bearish. Since its early August sell signal, Composite Oscillator 1 (upper-middle of page 4) has declined but resides midway between overbought and oversold levels, as of today’s close. Composite Oscillator 2 (lower-middle of page 4) did descend to oversold territory two weeks ago, but this technical condition likely equates to the minor oversold level of January 2022 – which coincided with the “start” of a 9-month decline, rather than being a terminal signal. The conclusive signal might be the Consecutive Up-Down Day index minus Composite Oscillator 1 (bottom of page 4), which is now just beginning to decline from a major sell signal (similar to late-2021 and early-2002).
From a fundamental perspective, it remains unclear the degree to which numerous geopolitical, economic, and financial factors will affect stock prices. Some of the major factors include escalating geopolitical crises related to the Ukrainian-Russian and Israeli-Hamas wars, domestic political dysfunction related to the inability of Republicans to select a new Speaker of the House, intensifying economic malaise related to rising consumer prices and resumed student loan payments collectively squeezing spendable income, and rising interest rates constraining loan activity. In general, investors have treated these negative factors as irrelevant, or alternatively, they simply ignore or are unaware of these concerning factors. However, as technical conditions continue to deteriorate, sentiment related to these overlooked negatives could easily snowball into an uncontrollable crash.
Based on the seasonal and eclipse cycles (page 5), the next 2 to 5 weeks are especially critical for stocks. If one only considers the seasonal cycle, the 1929 and 1987 crashes occurred during the last 3 weeks of October. In other words, stocks are entering prime time for a crash. However, based on the eclipse cycle, the current turning points are out-of-phase by 2 weeks. The current “secondary top” coincides with a solar eclipse (October 14) rather than a lunar eclipse (October 28), as happens in most crashes. In conclusion, the evidence suggests that the weak rally in technology stocks is terminating, and the decline in the broader market will soon bring all stocks crashing down to Earth (to normal valuations) – which means stocks are likely to collapse 50% or more in coming weeks.
Universal Cycle Theory Financial Newsletter October 12, 2023
Complex Crash Scenarios
Steve Puetz, Editor
Market action over the past three weeks continues to provide evidence of an imminent market crash. Yet, the exact form of the crash remains complex with multiple scenarios still viable. Equity indices such as the S&P 500 (top of page 2) and NASDAQ have generally weakened over the past 12 weeks. For most investors and analysts, the modest decline in the major averages since early August seems unalarming. Yet, numerous secondary indices, along with many technical indicators, reveal ongoing deterioration far more concerning than that shown by the major market indices. Unlike the S&P 500, the Russell 2000 Index (middle of page 2) barely rallied during the past two weeks, while the Russell Microcap Index (bottom of page 2) fell to a 3-year low today. Likewise, the Composite Advance-Decline Line (top of page 3) closed near a 4-year low today.
From a technical perspective, the NASDAQ 20-day Arms Index (middle of page 3) has moved from a neutral position a month ago, to overbought territory this past week. Similarly, the NASDAQ 25-day Gaussian Kernel RSI (bottom of page 3) has moved from moderately oversold 2 weeks ago, to high-neutral today. The ratio of the Equal-weight S&P 500 relative to the published S&P 500 (top of page 4) illustrates the massive deterioration in mid-cap stocks relative to large-cap stocks. The ratio is rapidly approaching a 14-year low, with the prevailing signal exactly opposite to that of late-2008 to early-2009 – when the ratio bottomed in November 2008, which was well ahead of the large-cap low recorded during March 2009. The composite oscillators also remain bearish. Since its early August sell signal, Composite Oscillator 1 (upper-middle of page 4) has declined but resides midway between overbought and oversold levels, as of today’s close. Composite Oscillator 2 (lower-middle of page 4) did descend to oversold territory two weeks ago, but this technical condition likely equates to the minor oversold level of January 2022 – which coincided with the “start” of a 9-month decline, rather than being a terminal signal. The conclusive signal might be the Consecutive Up-Down Day index minus Composite Oscillator 1 (bottom of page 4), which is now just beginning to decline from a major sell signal (similar to late-2021 and early-2002).
From a fundamental perspective, it remains unclear the degree to which numerous geopolitical, economic, and financial factors will affect stock prices. Some of the major factors include escalating geopolitical crises related to the Ukrainian-Russian and Israeli-Hamas wars, domestic political dysfunction related to the inability of Republicans to select a new Speaker of the House, intensifying economic malaise related to rising consumer prices and resumed student loan payments collectively squeezing spendable income, and rising interest rates constraining loan activity. In general, investors have treated these negative factors as irrelevant, or alternatively, they simply ignore or are unaware of these concerning factors. However, as technical conditions continue to deteriorate, sentiment related to these overlooked negatives could easily snowball into an uncontrollable crash.
Based on the seasonal and eclipse cycles (page 5), the next 2 to 5 weeks are especially critical for stocks. If one only considers the seasonal cycle, the 1929 and 1987 crashes occurred during the last 3 weeks of October. In other words, stocks are entering prime time for a crash. However, based on the eclipse cycle, the current turning points are out-of-phase by 2 weeks. The current “secondary top” coincides with a solar eclipse (October 14) rather than a lunar eclipse (October 28), as happens in most crashes. In conclusion, the evidence suggests that the weak rally in technology stocks is terminating, and the decline in the broader market will soon bring all stocks crashing down to Earth (to normal valuations) – which means stocks are likely to collapse 50% or more in coming weeks.