Bonds - 8/20/10 Timing Confluence

There is a confluence of linear and dynamic timing elements lining up on 8/20/10. Also, the nearby continuous futures tested the top of a 6 month channel at the highs today. I put on a small short position in early trading today, though I'm not convinced this is a major high yet.

Another series of cycles line up on 8/31/10 +/- a trading day or two. I'm guessing it may be a low, but I'll wait to see which way we trend into that timing window.

The most significant cycles and fib timing, suggestive of a major change of trend, line up at the end of the year, give or take a week.

Kim Rice 8/20/10

Follow-up to 1987 Analog

I posted charts on 6/10/10 regarding the similarity between current stock market and the1987 top,

http://markettime-patterns.blogspot.com/2010/08/djia-possible-fractalanalog-of-1987-top.html

I see Bob Prechter noticed this pattern similarity as well and was on Bloomberg yesterday talking about it.

http://www.bloomberg.com/video/62152902/

Normally, a market guru pointing out a pattern on a major network would diminish the likelihood of the pattern working out. However, I'm seeing pretty heavy call buying in the ISEE All Equities Only

data yesterday and today, which probably means investors are not aware of the pattern similarity or don't believe it. This seems ominous given the potential crash scenario unfolding. It is what it is until it isn't. It probably isn't if we advance above recent highs. If that occurred, some other pattern would be developing, though I think the bigger picture remains bearish unless the major indices can get a couple closes more than 3% above the April 2010 highs.

Kim Rice 8/12/10

DJIA: Possible Fractal/Analog of 1987 Top

Posted is a DJIA chart of the current market and a chart of the 1987 top that preceded the crash of that year.

It appears the current pattern in the DJIA is tracing out a very similar looking abc Flat correction as appeared in 1987. Both have a rising wedge in the C wave of the flat. The correction of the down wave in 87 was about 65%. So far, we are in that ball park in the current retracement of the down wave from the April 2010 top. If this observation is correct and the pattern continues to track, this market could melt down over the next few weeks or months. If this happens, it seems it would confound a lot of participants as it would follow on the heels of the big Fed announcement of more easing.

The biggest argument I see against this playing out is the traditional sentiment surveys don't seem as bulled up as would normally be expected for a crash scenario. So it's make or break time. I imagine the market could go sideways to slightly higher for a few more days (up to 10,800 to 10,900 or so) without invalidating the pattern, or it could just roll over from current levels. I think a rally much above 11,000 would likely invalidate the analog.

Kim Rice 8/10/10

Dollar: 1637 Trading Day Vibration

Posted is a daily chart of the dollar showing a series 1637 td turns, the last of which was due 8/6/10. It appears the dollar may be bottoming on schedule for at least a significant bounce and possible even another leg up. This last down-leg in the dollar has retraced exactly 61.8% of the previous up-leg. I would recommend covering if still short since the top posted here on 6/2/10: http://markettime-patterns.blogspot.com/2010/06/dollar-will-trendline-hold.html

Kim Rice 8/9/10

385 Trading Day Vibration in Stocks

The fractal pattern posted 6/30/10 http://markettime-patterns.blogspot.com/2010/06/djia-fractal-possible-short-term-base.html went a little deeper than expected on the downside, but marked the low timing-wise. The rally since that low has now retraced 61.8% of the down leg from the April top basis the NYA index.

The chart of the DJIA mini futures daily shows a 385 trading day vibration that has marked highs and lows for several iterations. We are currently in the window for another turn if this cycle is going to show up again. Additionally, the rising wedge pattern since the July 2010 low appears to be nearing its terminus, though I wouldn't rule out another spike up in current turn window before rolling over.

After the current 385 td vibration, I also have clusters of linear and fib cycles lining up on 8/20 and then a larger confluence on 8/26/10. All dates are +/- 2 trading days.

Lastly, I believe the dollar is bottoming now, which may add to downside pressure on stocks going forward. I think odds favor another leg down to challenge or break the July lows.

Kim Rice 8/9/10

Kim Rice