Friday, April 12, 2013

The Dominant Cycle forecasts

In my 4/3 public post I mentioned:

"Even though there are good odds, it does not matter if a 7-12% Flash crash (FC) cycle occurs or not, what matters is that the dominant Cycle1 determines when exactly we should be long and then short if and when the FC does occur."

From the 4/2/13 Email:
"The dominant Cycle1 has been active and suggest an 4/1H, decline into 4/4L, 4/5-8H and 4/9L and then a rally into 4/16 higher Highs." 

Actual: We rallied into an 4/2 High (+1), declined into 4/5 Low (+1), rallied into 4/9H(+1) and saw a brief intraday 4/9 pullback Low, before the rally continued into All time Highs into today. The dominant cycle1 kept one from shorting prematurely as it was looking for an 4/5L and a rally to new All time Highs and with more to come.  

What's next: The dominant Cycle1 suggest the rally should continue into 4/17 High +/-1. The range we saw from 3/14 High into 4/5 Low, gives us a 1607.82 SPX target, which is close to the 1.272 extension at 1607.63 SPX and close to the expanding triangle trend line at 1606.79 SPX at the expected 4/17 High

You won't want to miss what happens next as the dominant cycle1 sees some wild swings afterwards.

Wednesday, April 3, 2013

The Flash Crash Cycle

The 5/6/10 mini Crash became known as the Flash Crash. I discovered this cycle back in 2010, 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. I was amazed, when I first discovered this cycle to find it was a perfect 360 Trading Days (TD) Cycle, like the 360 degrees of a Circle (Cycle), it suggested that this fixed Cycle was found at major turning points.

The Flash Crash (FC) Cycle is a fixed 75 wk/525CD/360 TD (degree) Cycle that was ideally due 3/23/13 +/- 1 month.

04/14/00L -358- 9/21/01L - 369/77- 3/12/03L -359 - 8/13/04L- 1078 (3X 360
=1080) - 11/21/08L-356/521-4/26/10H-364/526-10/4/11L-3/23/13 +/-Mo.

Some of the 525 CD/75 week 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.

The Flash Crash cycle in details
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 = 7.98 X 525 CD = 10/04/11L, Major Low.
Next → 04/14/00L= 4275 CD = 9.00 X 525 CD = 03/23/13 +/- Month

Looking back at all the FC Lows, we notice the next 75 wk Cycle Low is due 3/23/13L +/-month, in April 2013.

7 out of 9 FC Cycles saw 7%-26% (avg 12-14%) declines and most are in 2-3 wks
03/24/00H - 04/14/00L was a 14% decline in 3 weeks
08/31/01H - 09/21/01L was a 20% decline in 3 weeks
01/31/13H - 03/12/03L was a 16% decline in 8 weeks
06/24/04H - 08/13/04L was a 7% decline in 7 weeks
11/04/08H - 11/21/08L was a 26% decline in 3 weeks
4/26/10H - 05/06/10L was a 12% decline in 3 weeks
9/16/11H - 10/04/11L was a 12% decline in 2 weeks

7 out of 9 (78%) of the Flash Crash 360 TD/75 week Cycles saw sharp 12-14% declines, (2 of 9, 22% did not see any decline) mostly in 2-3 weeks some time in April 2013 Lows. Some were not "flashy", like the 3/12/03L and 8/13/04L, but were still major Lows.

Perfect (exact) 360 TD (degrees) Harmonics:
04/14/00L + 3240 TD (9 X 360 TD) = 03/07/13
09/21/01L + 2880 TD (8 X 360 TD) = 03/05/13
03/12/03L + 2520 TD (7 X 360 TD) = 03/18/13
08/13/04L + 2160 TD (6 X 360 TD) = 03/15/13
11/21/08L + 1080 TD (3 X 360 TD) = 03/13/13
05/06/10L + 720 TD (2 X 360 TD)  =  03/19/13
10/04/11L + 360 TD (1 X 360 TD)  =  03/13/13

It is interesting that so many (7) 360 TD degree Harmonics are all due in March 2013.

Conclusion Flash Crash (FC) cycle: As the Flash Crash (FC) Cycle is a 1 1/2 year fixed cycle, it will have a variance of a month, which means we can see the FC decline in April. Ideally the FC Low is due in April 2013. Once the major High is determined by the more precise dominant Cycle1, we will then see a swift 2-3 week, minimum 7% to average 12% decline most likely into the April Lows.

Even though there are good odds, it does not matter if a 7-12% Flash crash (FC) cycle occurs or not, what matters is that the dominant Cycle1 ( determines when exactly we should be long and then short if and when the FC does occur. 

Monday, April 1, 2013

Cycle Review and Update

There are 2 cycles that are active and being watched closely:

1.  The Flash Crash (FC) fixed Cycle. Experienced cycle experts know that all fixed cycles expands and contracts and as this FC Cycle is a long 1-2 year fixed cycle, it will have a normal variation of a few weeks to a month. I first mentioned on 2/26 that a Flash crash is coming in March, but as it is a fixed cycle, it could also be a month later, in April 2013 that we see the projected minimum 7% to average 12% decline.

2. The current dominant cycle is much more precise as it predicted the most recent Highs and Lows (click on chart above to enlarge), like the 2/4/13L, 2/19H, 2/26L, 3/6L and more recently the 3/18 High, which was 1 TD early at the 3/15H.  The dominant Cycle1 pinpoints, unlike the FC fixed cycle, the next swing High and Low, within 1 trading day. If you want precision, you need to follow the dominant Cycle. 

Here are some previous blog post examples of the dominant Cycle that was looking for: "2/25L, 2/28H, 3/1-4L”   Actual: 2/26L, 2/28H, 3/1L, see the 3/5 post:
It also predicted the 3/12L and a 3/18H. Actual: 3/12L, 3/15H, 1 TD earlier, see the 3/14 post:
More recently in the 3/18 weekend Email:All trends remains firmly higher. The dominant Cycle suggests a rally into 3/18H at 1564-68 SPX, decline into 3/22 Lows and rally into 4/1 Highs.”

Actual: We rallied into a 3/15H (-1TD), declined into 3/21L (-1 TD) and we are now rallying into Monday 4/1 High, as the dominant Cycle predicted.

Conclusion: The FC fixed Cycle may still manifest a 7-12% decline (see previous posts) in April 2013, but if a more precise guide is needed, you will need to follow the current dominant cycle that determines the next short and medium term swing High and Low. The dominant cycle would have prevented anyone from getting prematurely short between January to March 2013.