Thursday, October 13, 2011

The Flash Crash cycle in details


As promised I would post details of the Flash crash cycle.

The 5/6/10 mini Crash became known as the Flash Crash. I discovered this cycle last year when the Flash Crash occurred, which is why I named it the Flash crash cycle. This Cycle has been in the markets ever since the crash of 4/14/00 Low (click on chart to enlarge). 
 

04/14/00L – 09/21/01L =   525 CD = 75 weeks = 2.618 X 200 CD = 523.6
04/14/00L – 03/12/03L = 1062 CD = 2.02 X 525 CD = 03/12/03 Major Low
04/14/00L – 08/13/04L = 1582 CD = 3.01 X 525 CD = 08/13/04 Major Low
04/14/00L – 11/21/08L = 3143 CD = 5.99 X 525 CD = 11/21/08 Major Low
04/14/00L – 05/06/10L = 3674 CD = 7.00 X 525 CD = 05/06/10 flash Crash
04/14/00L – 10/14/11   = 4200 CD = 8.00 X 525 CD +/- 1 week

I had marked 10/14/11 since last year as the next flash crash cycle Low to watch.  
Please note, some of the 525 CD/75 week flash crash cycle Lows were major Panic Lows, like the 4/14/00 Low, 9/21/01 Panic Low and the 11/21/08 Banking crisis Low, although some were not all that "flashy", like the 3/12/03 Low and 8/13/04 Low, but still they were major Lows.

Comparable Crashes:

1. 10/20/87 Crash week had a   66.23 SP range, 23% decline
1. 04/14/00 Crash week had a 187.79 SP range, 12% decline
2. 09/21/01 Crash week had a 145.00 SP range, 13% decline
3. 10/10/08 Crash week had a 257.76 SP range, 23% decline
4. 05/07/10 Crash week had a 139.34 SP range, 12% decline

Here are some interesting statistics:
4/14/00 Crash week, 9/21/01 crash week and 5/6/10 Crash week all saw a 12% decline.
A 23% decline from the 5/2/11 yearly High, would target 1055 SPX.
A 12% decline from the 9/16 Highs, it would target 1070 SPX.
Also note that Cyan weekly channel support comes in at 1065 SPX area, which was the 5/6/10 Low and 8/13/04 major Lows, 2 previous flash crash cycle Lows. 


Price targets:
1060-70 SPX is the long term Monthly SPX  channel support from the 8/87 High.
Originally the bias was we decline into the 10/14 Low +/- 1 week, with a minimum 1055-60 SPX target.

The 10/4 Low at 1074.77 SPX certainly qualifies and could have been the Flash Crash Low.
Due to excessive bearishness, any crashes could be delayed in this October Crash Phobia Month.

On the other hand, the flash crash cycle could still be out there in the coming weeks ahead, but we would need fresh bearish news from Europe or elsewhere to stimulate it.

4 comments:

Timer said...

my views for sharing..

http://timecycles-timer.blogspot.com/2011/10/15-oct-thoughts.html

Raj Time and Cycles said...

Thanks Timer,

I have more evidence that 10/4 was the Low for October month

Raj Time and Cycles said...

Btw, I told subscribers more than a week ago, that 10/4 Low was the flash crash Low.

Raj Time and Cycles said...

From the article: "Please note, some of the 525 CD/75 week flash crash cycle Lows were major Panic Lows, like the 4/14/00 Low, 9/21/01 Panic Low and the 11/21/08 Banking crisis Low, although some were not all that "flashy", like the 3/12/03 Low and 8/13/04 Low, but still they were major Lows."

Just to be clear: This 10/4/11 was not flashy, but it was a Major Low.