The stock market is fast Th stock market is approaching one of the two most critical time frames of the year. In the next four weeks a major (one which will hold for at least two to three months) low is likely to develop, completing the ﬁst wave down. In two weeks the ﬁrst of a sequence of cyclic convergences appears on October 11-12, 1990. This two-day time frame occurs 81 days from the solar eclipse of July 22 and 80 days from the initial breakdown which portended this entire decline- July 23 (see the”Lost Cycle article in last month’s issue for further explanation on the signiﬁcance of this cycle).
It is not, however, until October 22 and October 29-31, 1990, that the most important alignment of cycles occurs potentially ushering in a dramatic reversal or at least an extended period of consolidation. The basis for this expectation is derived from a comprehensive combination of markets, political and planetary projections, Elliott Waves, Gann angles and Fibonacci ratios combining with daily, weekly, monthly and yearly cycles to produce a greater synergy on this day than on any other in 1990. (It is interesting to note that October 22 precedes the dramatic tidal gravitational peak on December 2-3 by 40-41 days. This subsequent time frame also possesses a great deal of signiﬁcance and synergistic power, cyclically as well as geographically.) In the article, “The Lost Cycle”, in this issue of TW several reasons were stated for closely monitoring the October 22, 1990, convergence. These reasons were:
1—80-81 days from the invasion of Kuwait by Saddam’s forces
2—121 days since the summer solstice, and more importantly, 60-61 days prior to the winter solstice—more on this to follow
3—Three year anniversary of the October 1987 lows
4—Critical cyclic coincidence in the Dow Jones Industrial Average
After closer examination of the longer term cycles in the Dow and S&P 500, it was apparent that this date, particularly the month of October, is actually more likely to produce the lows for the year rather than the August 21-24 time frame mentioned in last months article which has already proved itself as a signiﬁcant reversal date.)
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October 22 occurs 60 days from the August 23 low and the inclusive week of October 22-26 occurs 60 weeks from the September 1, 1989 Orthodox (Ultimate) High. (Anyone following my Elliott Wave analysis realizes that I believe September 1, 1989 provided the Ultimate High in the stock market, recently reafﬁrmed by an interesting phone call and observation. The Dow Jones Transportation Average, the leader of stock market action from 1987-1990, registered its high exactly on September 1, 1989 coinciding with the peak in the Dow Jones 65 Composite—the combination of the Transportations, Utilities and Industrials.)
The following week arrives 61 weeks from the Orthodox High and more importantly, 61 yeas from the infamous October 29, 1929. If there is a major reversal forthcoming, it is likely to develop in this two week period. Keep in mind, however, that this will only terminate the ﬁrst wave down. It is this cycle which deserves a closer look and which I most often refer to as The Golden Cycle. Anyone familiar with the Golden Ratio recognizes .618 as the ratio which, among other things, is the foundation of the Elliott Wave Theory. Its application serves to identify future price and/or time levels where, or when, a culmination of the current wave, cycle or reaction is likely. It is unique, when viewed in this context, that the most consistent and predictable cycle in the Comex Gold market is a 60-62 calendar day cycle. (60-62 calendar days usually encompasses 4041 trading days so it is also consistent with the “Lost Cycle”) The 60-62 day cycle is not unusual since it is widely followed by Gann analysts because of its geometric application (60). But nowhere is it more prevalent (coincidence?) than in the gold market. It is evident on the daily, weekly and monthly charts and a few of the more recent examples are listed below as well as on the accompanying charts.
1989 High (November 24)—1990 High (January 24) == 61 calendar days
January 24, 1990 high—March 26, 1990 Low === 61 calendar days
(This wave culminated with a 28 Dollar drop on March 26)
February 5, 1990 High (Double Top)April 5, 1990 High == 60 calendar days
June 14, 1990 Low—August 14, 1990 High == 61 calendar days
July 12, 1990 Low—September 10, 1990 Low == 60 calendar days
October 15-16, 1990 == 61-62 calendar days from the August 14, 1990 Highs and should provide the next major low
December 14/17, 1990 will provide the most crucial revesal period in the Gold market this year as it comprises the convergence of the ﬁst second and potentially third multiple (If October 1516 produces a low) of the 60-62 day cycle as well as the three year anniversary of the December 14, 1987, Highs at 507.4. Throughout the decline of 1990 the 40-41 day cycle was evident, mostly on the lows at the same time the 60-62 day cycle was governing the highs and declines. The coincidence of these two cycles often provides the most potent reversal periods, particularly when it appeas 120-123 days from a previous major high or low, rather than 40 and 60 days from independent extremes. The 60-62 month period is also uncanny in its predictive potential as it should be since it represents the 5 year annivesary of highs and lows or in other words—half of a decade of market action. A couple examples, and projections, follow:
- January 1980 (Lifetime High)-February 1985 (Major Low) == 61 months
- January 1983 High- December 1987 High == 59 months (1 month error)
- February 1985 Low— June 1990 Low == 64 months (2 month error)
- (December 1987 High June 1990 Low == 30 months or 1/2 cycle)
January/February 1992 should mark the next major high The combination of daily, weekly and monthly cycles anticipate two other notable highs. The ﬁrst occurs on November 21, 1990 and the second squares with price on February 18-22, 1991 at 438-440. Other than noting its remarkable consistency in the Comex Gold market, there is not a great deal to add to what W.D. Gann has already observed regarding the unique properties of this cycle sequence (60, 120, 180…). Sufﬁce it to say that the proof is in the application of them, particularly in the gold market, within the structure of a well-disciplined trading strategy. The ﬁnal contribution to this cycle trilogy will focus on a very unique derivative of the Fibonacci Summation Series which governs the U.S. Treasury Bond futures market.