With the U.S. Presidential Elections this Tuesday November 8, and all the news lately stating the market is declining because of its uncertain outcome, it would seem logical to think that we can expect a market turnaround after the elections -November 9, 10- depending on who wins the electoral vote.
But, what if we already knew months ago that a market turn was set for those dates? What if the market runs on its own clock? What if the media simple tries to connect two unrelated dots? What if it really doesn’t matter to know why the markets decline or go up because all that matters is being on the right side of the trade and knowing the why really doesn’t help.
Thus we at Intelligent Investing tune out the news, don’t ask “why”, and simple only look at price and price only, because all the answers traders and investors seek are already in price. They are not on CNBC, not in the Wall Street Journal, not on Marketwatch, etc. No, your answers are in the price charts.
That said, let’s take a look at the price charts. Here we show the S&P500 (Figure 1) with two 34-day trading intervals, which have been in place since at least the top made in June 2015. Since then the S&P500 bottomed exactly 68 days (2x 34) later in August 2015 (red vertical lines), and also bottomed 170 days (5x 34) in January of this year. Note that 2, 5 and 34 are all Fibonacci numbers, which are critically important for the market (and for everything in life as we know it).
Figure 1. SPX daily candlestick chart: 34-day trading intervals and important trendlines
The 2nd 34-day trading interval (orange) starts at the September 2015 high. Exactly 34 days later the S&P500 peaked in early November. Then on the 3rd 34-day orange interval the market bottomed in early February almost to the day. Again, we are dealing with Fibonacci numbers: 1, 3, etc. Please check all other intervals and you will discover that most important market turns occur around these intervals. Hence, the market is running rather on its own internal and cyclical clock then on an external news driven clock: Politics Schmolitics.
You will see that the next turn date is set for November 10. On the Dow Jones it is November 9 (not shown). Clearly November 9, 10 were already known well in advance; and if the market will turn (up) around those dates the media will make you believe it was because of the elections. Here we proof it’s not; it’s because of the market’s own internal cyclical clock and the U.S. presidential elections simple coincide.
Note the red declining trendline, which is now at around SPX2075. In addition, the 61.8% retrace (another Fibonacci-based number; the golden ratio) of the BREXIT low (SPX1992) to the August high (SPX2194) is at SPX2068. And with the Dow Jones’ 200-day Simple Moving Average about 0.78% below current price levels (translating to SPX2068) and several other factors pointing to the SPX2075-2065 region as good support, while the market internals are extremely oversold, we can connect two dots: price and time and logically anticipate a market turn around November 9, 10 in the SPX2075-2065 region.
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