We've seen better

May 16, 2016 08:31 AM

At this time a week ago we had a few calculations that could have and probably should have propelled the stock market higher.

Those of you familiar with my work know every important pivot is run through a battery of tests, from Fibonacci golden spiral relationships to time cycle windows to my current new work, which are the square outs. From that I’m able to understand the quality and characteristics of a pivot. The better ones will sustain important rallies as long time readers know, but there is a large area where there are different shades of gray. Last week was one of those.

We’ve seen better and we’ve certainly seen worse, but from where we sat last week we certainly should have better than how it turned out. For instance, a week ago Friday the SPX turned higher 619 trading hours from the late December high. I realize the December high is starting to get in the rear view mirror and losing some of its influence. I also realize this time window is not at an absolute high or low like the February pivot. However, a better market would’ve made a more significant test of the high. This one didn’t and that could be a problem.

A lot of intermediate traders/analysts and investors look at a methodology, see it doesn’t produce the results they want and incorrectly conclude it doesn’t work. The truth of the matter is financial markets are not measured by linear math. They are measured by quantum physics, which is nonlinear math. The best we’ll ever do, as famed Turtle Trader Curtis Faith tells us, is managing risk.

In every situation there is the higher and lower probability. The higher probability doesn’t always materialize. In this case, last week may be remembered as the week the market should’ve done better but didn’t. There could be serious implications. When a market doesn’t do what it should when it should its usually trying to tell us something.

Realize I didn’t set the bar awfully high. All I was looking to see was a move up into the one-year anniversary of the SPX top on May 20, which almost coincides with the end of the current Mercury retrograde period on May 22. See, you can make a case this downtrend started on the SPX high on April 20. The Mercury period didn’t start until the 28th. What the MR usually does is tear the prevailing trend to shreds.

Starting a week ago it looked that way as the down pattern was interrupted. I’ve seen this time and time again over the past 13 years, which is probably when I first became acquainted with Mercury’s impact on markets. At least you know where I’m coming from.

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About the Author

Jeff Greenblatt is the author of Breakthrough Strategies For Predicting Any Market, editor of the Fibonacci Forecaster, director of Lucas Wave International, LLC. and a private trader for the past eight years.