With expert eyes like Max….
Max Whitmore is a sometimes contributor to BawldGuy’s website. I always look forward to his wisdom. I signed up for email updates, and this latest gem is what I received in my inbox:
ON THE EDGE OF ……WHAT? 10-3-11 By Max Whitmore
I promised that from time to time, as conditions warranted it, I would send a follow-up to my original article about what the charts tell me might be coming over the next year, give or take a few months. On Friday (9-30), we closed the third quarter of 2001 and the charts showed me a picture that said I better get hopping and get an update out – NOW.! So, let’s see just what happened at the close Friday.
I have inserted the chart date 9-30 and here is its explanation (by the way, those that sent me their e-mail address last article are getting the chart full-sized. If you would like to be added to this special list, send me your e-mail address to firstname.lastname@example.org and next article I will send you a full screen chart, too)
The most important feature it the huge up channel that is described by the two up-slanting black lines. Since March 2009 the price of the S&P cash index has worked its way up and down several times, but always within the bounds of this up-channel, as it is called. At the close on Friday, the price (in black at right side of the chart – 1131.42) closed almost exactly on the lower band upline of the channel. While it is still in the up channel, the more important fact is that the price is BELOW the “blue” area and BELOW the SUPER CHART KEYLINE! For those of you familiar with the SUPER CHART, this is a very ominous sign. From here, if we close below the channel’s lower black line, the odds for a major decline go from 50-50 to over 80% likelihood.
Now, let me repeat one point here, also. This is a weekly chart, so it will not be until next Friday (10-7) that the next dot will be added o the chart. During the week if we may close a day below the line for any one or more days, it does not count as a break – not until the Friday close.
Now, if we do close below the line, the next major support will be that the NECKLINE, currently in the 1020 S&P area. If that does occur in the next 2-10 weeks we do hit the NECKLINE and stall,(and remember, the time line here can cover that long a period, although I expect it to be in the 3-5 week area for us to hit it) the next move should be to the up side for awhile. Why? Because the RIGHT SHOULDER of the Head & Shoulder formation must be completed next in the sequence of events to finish the total formation.
I won’t go into a long discussion of the Head & Shoulder formation here, but in the typical one, the LEFT shoulder gives some idea of what to expect from the formation of the RIGHT shoulder. It says that the time it took to form the LEFT shoulder is just about the same time to expect from the RIGHT shoulder to form. I have had some that formed faster and some slower, but that is unusual, not the norm. It took from 9-4-09 to 7-2-10 or eleven months to form the LEFT shoulder. That means that the time expectancy of the RIGHT shoulder finishing its forming would occur about 10 months from the time we hit the NECKLINE and start up– sometime mid-2012, or so it would appear.
If all continues as it currently appears the final move is the crossing down of the NECKLINE and a move to the S&P 670 area, or 350 points below the NECKLINE. You can see that I have set two green vertical lines that show first the distance from the top of the HEAD to the NECKLINE (line #5) and then this same distance from the NECKLIE down to the “target.”
Will I t stop at the target? Maybe, but it may not. Look to the far left on the chart for line #1, #2, #3. The green vertical line #1 was also measured from the top of that HEAD to the NECKLINE and then line #2 shows the move down to the “target.’ This all happened in the October 2008 crash. (By the way, my article of 9-4-08 (which I have attached) called that crash right down to the major first “target.”.) But, note line #3 (red) shows that this fall was TWICE the drop from the NECKLNE to the first “target,” a huge drop that could happen again. Only time will tell, of course.
Now, to repeat the one big proviso in all this discussion. As long as the formation continues to unfold as I have described to you, this IS going to happen – that is the S&P 670 area sometime next year. But, anywhere along the line the formation can always fail. If it did, I would quickly let you know. But if it doesn’t, I will repeat the recommendation I gave 6-8 weeks ago. Be in cash for now! When we get to the NECKLINE, maybe as much as 25% of the cash might be reinvested in the World Dominiator typr stocks , as Stansberry & Associates call them. But ,when we either reach 1200 S&P or the move up forming the RIGHT shoulder stalls, sell your stocks and buy puts on the S&P. Again, don’t fret about how to do all that. As it unfolds, I will keep you up to date as to what action I would be recommending. Just keep your eye on the up channel and whether the price stays between the two black lines.
And before I close this note. I have also included the current chart for oil. It, too, is a Head & Shoulders’ formation and it is saying that the target is the $65 per barrel area. In this formation, the NECKLINE has ALREADY been broken to the downside and I expect that the “target” of the $65 a barrel will be hit in the next few months.
And here is my Gold chart.
The important thing here is that the price shot up out of the up channel and is again back in the up channel. As with the S&P, if we stay within the channel, I expect that we will see a continued up move in the GOLD. I would also send you to a web site I check often these days. The TSI Trader. It has a very good article on GOLD and the formation know as a “parabolic.” I will let the article speak for itself. The web address is: http://thetsitrader.blogspot.com/2011/08/golds-parabola-equation.html.
Well, I want to keep these articles short and to the point, so I will sign off for now. If you have any questions, let me know at my web address above and I will do my best to give you an answer. See you next issue. In the meantime, you keep in touch, I do!