S&P Stocks Bear Market Rally Top Update

By: Alistair_Gilbert

“TIME is more important than PRICE”, in the immortal words of WD Gann, is the reason why I look for TIME Cycles in the markets, because when TIME is up PRICE will fall. I have a number of TIME Cycles falling over the next week starting with yesterday which tells me that we are nearly at a top or possibly the top.

Before examining my TIME Cycles, let us look at the DELTA charts to see what guidance we have there. For the “big picture overview” we go to the Monthly chart which says that we are firmly in the parameters for LTD 6 high, which, whilst due in November, would likely arrive early if the big picture is down. Also it is worth noting that it is LTD 1 next and the biggest moves always happen either side of 1.

We are approaching the middle line of the Bollinger Bands which currently falls at 1084, so we are still in Bear market territory. Should we move above the middle Bollinger Band, we would likely only have a small correction followed by the market continuing to move higher for some months.

On the Wilder DMI Indicator we see the red line is on top which confirms that the Bear market is still in control, though it is converging. Should they cross, this would indicate that we have much further to climb.

Moving on to the weekly chart, we notice that whilst PRICE is climbing firmly in the upper Bollinger Band, the MACD has been diverging bearishly since May saying the rally is not to be trusted.

Note also that the Stochastic is diverging bearishly despite the market attaining higher highs in the last few weeks.

Moving on to the Daily short term chart, ITD 11 is due Friday 18th and it will likely bring in the MTD 3 high as well, showing that we are due a bigger move down to MTD 4 due with ITD 2 on 22nd October.

Whilst the MACD has presaged this week’s advance, it is at much lower levels than mid July.

The Stochastic last night was at a stratospheric 96.5 and will be higher today warning us that the top is due in the next 48 hours.

I will now run through the Dynamic Trader charts that I have prepared which are fairly self-explanatory.

If we measure from the October 2007 high to the March 2009 low, this Friday 18th is the Fibonacci 38.2% in TIME, so a possible turning point.

This is an interesting chart as the upper line of this contracting triangle connects from the major lows in November and January through the highs of May, June, August and September. The upper boundary is about 1062 currently and a small throwover would be a good sign of a terminating pattern.

I have two further TIME Cycle patterns. The first is a 44 traded day pattern which expires today which is 3 traded days after due date. It has been pretty good at identifying when a market turn may be due with January high being 2 days early, March low bang on time, May high bang on time, July low 2 days late and current high 3 days late.

Finally, I have a 68-day TIME Cycle pattern which is due tomorrow 17th September. It selected 26th November high perfectly, the 6th March low perfectly and the last one was the 11th June high perfectly.

This Increases the odds of tomorrow being the top for a while.

It is worth watching twin Fibonacci numbers as they regularly turn up as turning points.

In addition to the TIME turns, a few other observations are that the Bullish Percent Index now stands at 93 consistent with previous market tops, the Money Flow Index has been dropping for a month suggesting that the market is being ramped up on less money and finally the CCI Indicator is just below 200, the same as the August 28th high.

The S&P has now risen over 60% since the March 6th low and is now due another correction.

By Alistair Gilbert

www.alistairgilbert.com

ALISTAIR GILBERT has worked in the markets for over 30 years. He has worked as an institutional research analyst for a firm of stockbrokers where he got his grounding as a technical analyst. He has also worked as branch manager of a firm of stockbrokers managing private client portfolios and as a fund manager for a leading merchant bank. Alistair was also Managing Director of a Swiss Fund Management group with over $1 billion under management and developed the business extensively in the Middle East.

Alistair has now returned to his native England where he now specialises in TIME and PRICE analysis utilising Elliott Wave, DELTA and a range of technical indicators. I can be contacted via alistair@alistairgilbert.com

Disclaimer: The ideas expressed in this Report are the thoughts of Alistair Gilbert and represent part of the intricate process that he goes through before arriving at a trading decision and as such are like a trading diary. Alistair Gilbert is not an authorised investment adviser and as such none of his statements should be construed as investment advice. The value of investments can go up as well as down and trading is very high risk. Readers are advised to consult with their own investment advisers who may be better qualified to offer a trading strategy based on your own individual circumstances.

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