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10.16.17

Lindsay: 12-year Interval


The failure of the 15-year interval high (counted from the 9/21/01 low) to appear on time does not mean the bulls are out of the woods yet. A 12-year interval is sufficient to pull the Dow down into its forecast low without the help of a 15-year interval. A 12-year interval forecasts a low in a time period extending from 12yrs, 2mo to 12yrs, 8mo. from a significant high. The 12-year interval counted from point B of the long cycle on 3/7/05 is active until approximately 11/7/17.


Once the correction is complete we expect the Dow to move to new highs and finish the secular bull market at point J in the period stretching from Dec’17 to Sept’18. We will narrow that forecast down considerably with the use of the standard time spans and counts from the middle section.




9.5.7
Top this Week

C
ycles pointing to a low near August 21 were successful. We now have cycles and Lindsay models pointing to a high this week.

Middle Section forecasts point to a top this week. The high on 7/16/14 counts 575 days to the low of the basic decline on 2/11/16. 575 days later is 9/8/17


No middle section could be found centered on the low of the previous basic decline (10/4/11) that forecasts a turn this week.


The high on 9/6/2000 counts 3,103 days to the low of the multiple cycle (3/6/09). 3,105 days later is Tuesday, 9/6/17.

 

Lindsay’s 107-day count (107 days from a significant low to a high) also forecasts a high this week no later than Friday (chart). Lindsay explained that there is a 5-day window around the 107-day count (102-112 days). 




8.28.17

12-year Interval


The first step for finding a low in the work of George Lindsay was the 12yr interval. Counting forward from a significant high (in this case point B of Lindsay’s Long Cycle on 3/7/05) finds a significant low 12yrs, 2mo – 12yrs, 8mo later.


This six-month interval forecasts a low in the period from May 2017 to the end of October 2017. Given that we find ourselves at the end of August, the six-month period is narrowed to just two – and the two most likely months to experience a significant drawdown, seasonally speaking.




8.21.17

Act II


Cycles warn that the sell-off in equites during the last two weeks should find a bottom this week – temporarily. The Bradley model does not hold much hope for those who hope to trade the bounce as it points an upwards-to-sideways move until mid-September when it drops precipitously into mid-October.


The Decennial pattern warns of a nasty sell-off in equities during years ending in the number 7 (i.e. 2017).  Since 1907 each of these years (with the exception of 1947 which suffered a mere 6.2% drop) has seen a double-digit decline beginning somewhere between June and October.


One non-cyclical indicator warning of a low is NYSE new 52-week lows (chart). They have reached a high enough level to indicate that market participants have thrown in the towel (the selling is over for now).




8.15.17

Intermission


Last week’s Market Update – Showtime! – announced that the time had come for a sell-off in equities and we were not disappointed as the Dow lost over 234 points (worst week since March). Internal indicators now point to a pause in the decline. It’s now time for a short Intermission.


One of those indicators is the total number of unchanged issues divided by the total number of issues traded (NYSE). It reached a low on Thursday indicating a low in equities.

A 21-week cycle low is due the week of August 21 (solar eclipse!). Unless equities reach the 38.2% retracement of the 2016 rally near 2,220 by then, I doubt that will be the end of the decline. Rather, it will likely be the beginning of an intermediate bounce in a bigger seasonal decline.



8.7.17

It's Showtime!


The July 10, Market Update laid out our case for a tradable high in equities to commence sometime by August. We now have a host of reasons (laid out in this report) for thinking that high is now upon us. It’s Showtime!

As explained in the July 10 Market Update, a 15yr interval points to a tradable top (within the ongoing bull market) in the period September 2016 to August 2017 and we have come to the end of the forecast period.


A popular approach of Lindsay’s was his low-low-high interval. Lindsay showed that counting the number of trading days between two important lows often leads to a high the same number of days into the future. The distance between the lows on 2/11/16 and 11/4/16 was 186 days. Counting forward another 186 days targets a top near August 3, 2017. 


Seasonally, a top in August makes total sense as August and September are the two weakest months of the year for equities.


The Decennial pattern warns of a nasty sell-off in equities during years ending in the number 7 (i.e. 2017).  Since 1907 each of these years (with the exception of 1947 which suffered a mere 6.2% drop) has seen a double-digit decline beginning somewhere between June and October.


Eight Hindenburg Omens have triggered over the past 30 days - the largest cluster of Omens since October 2000. Over the past six months, the S&P 500 has seen nine Omens -- the most since 2007. The Bradley Model shows an inflection point in mid-August which would seem to be a top.




7.24.17

37 Week Cycle

While the Advance/Decline line (among other indicators) keeps us bullish in the long-term, short-term, the environment is not so sanguine for equities. Both the Hybrid Lindsay model and a 37 week cycle point to a high last week. We can’t help but wonder if this is the top forecast by Lindsay’s 15 year interval (see Market Update 7.10.17).




7.10.17

Market Correction


Not all long term intervals (15yr and 12yr) are counted from the points (A-M) of the long cycle. Lindsay wrote that counting from any significant low can help to target a market high 15 years later.


The sell-off which terminated on 9/21/01 was sharp enough that we should be able to count to a market high using Lindsay’s 15yr interval. The 2001 low points to a high during the period September 2016 to August 2017. That forecast is bolstered by a 12yr interval counted from 3/7/05 (point B) pointing to a low during the period May-November 2017. We can’t expect a low without a previous high.


The problem with trying to find these inflection points that are not one of the labelled points on the long cycle is that we don’t have the basic advances/declines and their standard time spans to help us. What we do know is that the 15yr interval is running out of time. Expect a correction within the ongoing bull market.


We have other reasons for expecting a significant correction in the immediate future.  Lindsay warned to expect a “fast selloff followed by 5mo minimum rebound 8 years after an epochal low”. One need not look too hard to determine that the March 2009 low was, indeed, epochal. If Lindsay was correct, July 2017 means that the market is now on borrowed time.

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