Hourly Kairos readings on the hourly Dow have captured the last two lows. That means we have an old-fashioned stock market rally despite the country heading straight at the iceberg come election day, says Jeff Greenblatt of Lucas Wave International.

Everyone sees it. Who among you believe the outcome will be decided that night? So, it could be the market is developing a blow-off top. Could be Trump is going to win, don’t you think?

Trump should win, but that won’t stop those who have looted and burned down cities from doing it some more. Did you see the reaction in Los Angeles to the Lakers winning the championship? So, is the market stringing us along right to the limit? I can tell you this much, odds favor your broker raising margin requirements around the election so please be sober as you trade closer to the election. If that wasn’t enough, we’ve entered the Mercury retrograde period again. It started on the 13th and runs through election day. For those of you who don’t know, the Mercury retro period has an interesting track record for messing with support and resistance levels. I don’t take the same interest in financial astrology like I once did but there are some tendencies not to be ignored.

For the next three weeks the rule is taking your profits too soon as the price action tends to under or overshoot targets. Many of you do take note strange things tend to happen during a Mercury retrograde period. It also raises the risk of geopolitical or domestic miscommunication as Mercury is said to be the planet of communication. Imagine the last three weeks, the stretch drive to the election, with this condition.

Getting back to the Dow, we know the 98-hour low held from 29,199 high. Now the spike at 62 hours from the low and 161 hours from the top held as well. So, it remains bullish if the Dow can hold the magnet line from above. An impending test is likely to develop and if they were to bounce off that line, it could send up a big move up, which would increase the blow-off top scenario. There is still a long way to go to election day. Some have said the market would still rally on a Biden victory because more easy money would flow from Congress. By the way, have you seen Congress dither with the latest round of stimulus? Wednesday’s market did take notice. Other than that, it was a relatively quiet week, which could be the calm before the storm.

DOW

Now I want to show you how Kairos lines up with traditional candlestick formations, most notably a reversal formation. I’ve found in many cases the candle reversal formation on a 1-minute chart leads to better navigation and trading decisions as opposed to a 5-minute chart. If you are a swing or position trader this won’t apply to you. But for those of you trading intraday, if you wait on a reversal formation on a 5-minute chart, chances are you’ll be leaving lots of points on table on the front end and you’ll be perpetually chasing as the entry is too late. In this case it was possible to pick up close to 30 points in less than 10 minutes.

kairos

What we are watching for is the candle reversal formation when one side gets the upper hand over the other. Here the bears don’t get the upper hand until such time they can take out the low of the big green bar, which creates the high. Let’s be clear, the bears don’t get the upper hand the green bar is cleared and retested. Note it retests in just about the exact right place. You can take this trade without price and time square out Kairos readings but catching the symmetry may add an element to your conviction. In this case we have an 26,867 high. From the low at 802 to pivot at 835, that’s only 33 points. What if we invert the numbers, take 102 and subtract 35? Don’t we get 67? That’s how markets flow in non-linear fashion. If you want to flow with time and price vibrations, you’ll miss at least 25% of the setups because they develop out of inversions. You have to practice extensively in order to be able to recognize how they work in real time. Just by reading this post you’ve saved hundreds of hours of due diligence.

bar

This is chaos theory at work. Markets will do whatever they have to in order to make the numbers work. This is not a case of us form fitting a buy or sell signal. The market is better at form fitting than any of us could ever be. It our job to be aware of the tendencies and connect the dots. In this case Kairos lines up perfectly with the candle formation. What you’ll find in a lot of instances is the price action will test candlestick reversal formations with great precision.

As we get closer to the election, this is no time for normalcy bias. Expect something weird to happen, perhaps historic. I’m not rooting for it, but I’d be surprised if something important didn’t happen.

For more information about Jeff Greenblatt, visit Lucaswaveinternational.com.