Fed Set To Spook The Markets Once Again!

The charts below show that the recent rally is just fodder for the beast. Prior to the last FED meeting on September 17, I warned of an impending sell-off due to the FED's statements. The S&P500 fell from a high of 2020 to a low of 1871 in 8 trading days or about 7.3%! The BIG question this time is "how low?" not IF.

I have two downside targets: SPX 1913/15 and SPX 1828/30. Astro-wise, early this week, we have the "George Bayer Rule" of Mercury crossing the same path the sun did during a prior eclipse. The last time we saw this, the SPX fell 236 point in 4 trading days (late August 2015). We also have Mars joining in this time with Mercury.

The 5/10 week cycle low is due in early November. The last cycle low on September 30 was just the 5 week low. We also have the 7 week low due in gold and the mining shares in early November. GDX is sporting an inverted bearish flat. The commitment of traders shows excessively long gold contracts, that prior in this bear market has proven to be an important top when gold has gone above the 200 day moving average.

The next important top should occur around Thanksgiving right before the next nesting of lows: the 5 and 7 week (and tax selling) low of around Dec 8. From early December to late December/early January should be quite bullish, but watch out, there is another low, the 20 week and 40 month Kitchin cycle low due in January 2016. How that forms, (I believe) will have a lot to do with the how far down the early November drop goes.

Meanwhile, Fed-speak this time around could be hinting at a rate increase within the next few months, something the recent rally participants may find less palatable than they had been thinking. Trick or treat!

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Brad Gudgeon, editor and author of the BluStar Market Timer, is a market veteran of over 30 years. The subscription website is www.blustarmarkettimer.info

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