A Trader Asks: Has Europe Just Topped?

07/03/2017 2:51 am EST

Focus: STRATEGIES

Jeff Greenblatt

Director, Lucas Wave International, LLC

Are we are looking at an advance indicator to our own markets?  The Dow has topped on June 20 which is the seasonal change point. The CAC topped over a month earlier, asserts Jeff Greenblatt, director of Lucas Wave International and editor of The Fibonacci Forecaster.

The CAC is an interesting chart I’ve been tracking on a regular basis. As a trader and market timing cycle expert, I don’t necessarily make predictions because one can make money or be a hero but chances are both won’t happen. But I do know when high probability reactions are due. Case in point is the recent turn in oil right on the button at 377 calendar days at the seasonal change point.

The most interesting point of the year comes in the late August-October sequence as the Dow celebrates the 30th anniversary of the 1987 crash. For those of you who follow Gann, that’s 360 months and nothing to sneeze at.

Here are a few dates to think about as you hit your favorite lake, river, beach or casino this weekend.

The top of the of the 1987 leg that led to the crash was August 25, 1987. That’s where the 360-month anniversary kicks in. By itself, that’s not enough because we get lots of 360 month anniversaries where nothing happens.

Here’s what concerns me. The event many in the Elliott community generally recognize as the top of their grand super cycle 3rd wave from 1949 is in 1966. The actual date the Dow topped was February 9, 1966. From that day to today is 616 months. This is the end of June, add two months and we get golden spiral 618 months.

On August 25, just a couple of months from now, the market will be 618.51 months removed from the 1966 top. Nothing is guaranteed to happen but the market has a memory and more often than not these kinds of symmetries do set off some type of reaction.

Why are we talking about this today? Today is the end of the quarter and the CAC put in an interesting monthly bar. From the bottom in 2009 to the first peak is a range of 1704 points. Take 1704 and multiply by 1.618 to get 2757. Add that to the 2011 low of 2693 and we get 5450. On May 8, the CAC peaked at 5442. That’s a clear 1.618 extension which missed by less than 1%. The CAC has been drifting lower since May but didn’t seem to make a material difference until Thursday when it put in that wide range bar.

chart

On Friday, the monthly candle completed and while on a monthly basis you can’t say the long-term bears got the upper hand, the calculations suggest they are not far away.

When you look at this high compared to the prior high in April 2015, if you were looking at an hourly or daily chart a good technician would conclude it’s nothing more than a new marginal high. They’ve already penetrated the territory of that high which was 5283. The June monthly close is 5117. The question is whether we are looking at an advance indicator to our own markets?  The Dow has topped on June 20 which is the seasonal change point. The CAC topped over a month earlier. At the very least there is a divergence working in terms of time.

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