Something Big Is Coming To Markets

We are about to see a series of cycle turns occur simultaneously over the next 30 trading days, a period which includes a Fibonacci Cluster turn window with 10 observations. Within this 30 trading day period are a number of very unusual astrological events, which can affect markets. In the past, we have pointed out that major trend turns often come around the spring equinox, which this year arrives within the important Fibonacci Cluster we discuss below, on March 20th, 2015. Within this cluster turn period we also have a rare Total Solar eclipse (also on March 20th, 2015), the first day of the Hebrew calendar, (Nissan 1, evening also on March 20th), and a New Moon on March 20th.  March 20^th is also a quadruple witching hour on Wall Street, an options and futures expiration date. Also within this Fibonacci cluster turn period, on April 1st, 2015 is a phi mate turn date, and on April 4th we see a Bradley model turn date, which is also Passover, and also has a Full Moon — not just any Full Moon, but a Blood Moon, the third of four in the 2014-2015 tetrad, a very rare event, that has the additional extremely rare occurrence that all four of these Blood Moons fall on the Hebrew Holy days of Passover and the Feast of Tabernacles (see Genesis 1:14). Something big is about to change.

In our weekend report to subscribers at www.technicalindicatorindex.com , we show that contemporaneous with these events, the stock market has now formed two Megaphone topping patterns that look complete, a Jaws of Death topping pattern that is over two decades old, that started back in 1988 and is reaching conclusion now, and also a Jaws of Death pattern from mid-2014 that is also completing now. See the charts for these patterns below:

The significance of this confluence cannot be overstated. A huge directional change in markets is fast approaching. We believe there could be a stock market crash later this year, perhaps in the September – October time period, after the approaching major trend turn begins. The Federal Reserve is about to lift short-term interest rates during a period of time when except for Manhattan and the surrounding areas that enjoyed a $5.0 trillion influx of cash from the Fed’s various Quantitative Easing programs, most of the U.S. economy is not prospering. This is a formula for a recession or worse.

The higher value of the Dollar has placed increased pressure on U.S. exports which will eventually show up in a retardation in the growth of corporate earnings. Real Estate remains at a standstill. Newly created family supporting jobs are not sufficient to handle demand as evidenced by the failure of the involuntary part-time employment figures to decline along with the reported increase in non-farm payroll jobs in the latest bogus employment figures, which included an estimate, a guess, a hope from the Bureau of Labor Statistics that half the jobs created came from new businesses they think started up in February. Anybody who knows anything about jobs in new businesses knows that most of the time the cash compensation is below market -- if new employees are being paid in cash at all. These new jobs that supposedly were created in February from new businesses are not counted by the BLS. They are a guesstimate. The point is, fundamental economic growth is not what we are being led to believe is the case. Our economy remains weak, so an increase in interest rates would be a repeat of what the Fed did back at the start of the Great Depression in the 1930s.

There are systemic issues of risk that are a serious threat to our economy, the out of control amount of derivatives to mention one, the out of control federal debt, for another, the unfunded federal liabilities for entitlements a third, and the risk of another Wall Street meltdown contagion should a major bank go down the tubes.

Back to the technicals, we saw another stock market Hindenburg Omen observation on Friday, March 13^th. If we get a second observation over the next 30 days, that will generate the third independent Hindenburg Omen that contemporaneously remains on the clock over the same next 30 trading days as mentioned at the start of this article. We also got an H.O. in December that remains on the clock through April, and also got an official H.O. in January that remains on the clock through May 2015. This is a highly unusual event, a series of Hindenburg potential stock market crash signals within a few months. An H.O means there is a 20 percent chance for a stock market crash, which is substantially above random, and we must also mention that there has only been one decline greater than 15 percent over the past 30 years that was not preceded by a Hindenburg Omen. H.O.’s mean the stock market is a seriously unhealthy condition.

I will wrap up this article with details of the coming Fibonacci Cluster turn window we have identified. There is a major trend turn coming to stock markets sometime over the next one to four weeks, and the below chart analysis suggests sometime between March 18th and April 22nd. While it is unusual for us to present a Fibonacci cycle turn window with such a wide range of date possibilities, in this case 25 trading days (normally we point out turns with a 5 to 7 day possibility range), this time is different. Normally we see 4 to 6 past tops or bottoms a Fibonacci number of trading days from a future turn period, however this time we have spotted ten. That is not all, these ten are consecutive Fibonacci turn numbers starting at 34 trading days and running through 2,584. That is incredibly unusual.

While not a certainty, as there are no guarantees, if I was to venture an educated opinion, I believe it is probable that the stock market will top during the above Fibonacci cluster turn window, and continue to decline for years. I also believe that this autumn 2015 will see a stock market crash within this imminent multi-year stock market decline. It is possible this turn is so important that it started early, on March 2nd.                                   

We have found that when there is a cluster of trading days within a short period of time that are a Fibonacci number of trading days from a key top or bottom turn from the past, there is a higher than normal probability that a significant trend turn is coming around that cluster time period.

What are Fibonacci numbers? They are an incredible set of numbers that seem to rule markets, both in terms of distance of price moves and timing, and rule physics and art throughout the universe. 

The Fibonacci number sequence starts with the number one, and then when it adds it to itself, it produces the next Fib number, which would be 2 (1+1), then if we take that resultant number and add it to the previous Fib number in the sequence, it produces the next Fib number, which would be 3 (2+1), then the next number is 3 + the previous number in this sequence which was 2 resulting in 5 (3 + 2), then 8 (5 + 3), then 13 (8 + 5), then 21 ( 13 + 8), etc…, which gets us the sequence 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, etc….

What is incredibly unique about this sequence is the two component numbers, when divided by their combined result, will approximate at the low end, and otherwise equal either .382 or .618. The ratio .618 is known as phi. For example, for the Fibonacci number 21, its two components are 13 and 8. If we divide 13 into 21, 13/21 = .618 and 8/21 = .382. The larger the numbers, the more precise they come to .382 and .618. 233/377 = .618 and 144/377 = .382.

So, getting back to our Fibonacci Cluster for mid-March through mid-April:

*     April 6th, 2015 is a Fibonacci 2,584 Trading Days from the December 28th, 2004 Top.

*     March 27th, 2015 is a Fibo 1,597 Trading Days from the November 20th, 2008 Major Low.

*     April 22nd, 2015, is a Fibonacci 987 Trading Days from the May 19th, 2011 Top.

*     April 9th, 2015 is a Fibonacci 610 Trading Days from the November 1st, 2012 Top.

*     April 10th, 2015 is a Fibonacci 377 Trading Days from the October 8th, 2013 Major Low.    

*     April 16th, 2015 is a Fibonacci 233 Trading Days from the May 13th, 2014 Minor High.       

*     April 17th, 2015 is a Fibonacci 144 Trading Days from the September 19th, 2014 Top.

*     April 16th, 2015 is a Fibonacci 89 Trading Days from the December 5th, 2014 High.

*     March 18th, 2015 is a Fibonacci 55 Trading Days from the December 26th, 2014 Top.

*     March 20th, 2015 is a Fibonacci 34 Trading Days from the January 30th, 2015 Low.        

Our conclusion: Something big is about to affect markets!

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Robert McHugh Ph.D. is President and CEO of Main Line Investors, Inc., a registered investment advisor in the Commonwealth of Pennsylvania, and can be reached at www.technicalindicatorindex.com.  The statements, opinions, buy and sell signals, and analyses presented in this newsletter are provided as a general information and education service only.  Opinions, estimates, buy and sell signals, and probabilities expressed herein constitute the judgment of the author as of the date indicated and are subject to change without notice.  Nothing contained in this newsletter is intended to be, nor shall it be construed as, investment advice, nor is it to be relied upon in making any investment or other decision.  Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment.  Neither Main Line Investors, Inc. nor Robert D. McHugh, Jr., Ph.D. Editor shall be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided. Copyright 2015, Main Line Investors, Inc. All Rights Reserved.