Triangle peaking March 12, when US Inflation data released ...
There is a triangle forming which is peaking around March 12 which is when the US inflation data is being released. According to the theory, the market can either go up or down at the peak of the triangle by approximately the same distance as the height of the triangle formation.
I suspect it will go down at the peak of the triangle due the weekly indicators showing an overbought signal. I would wait for my daily indicators and weekly indicators to align to confirm an entry point.
In the past, such as the beginning of Feb, 2018 or October, 2018 or even the big drop in 2020, the market dropped 61%, then retraced between 38.2-50% of the previous move then moved back down to another Fibonacci level. You can also find the end of the move by measuring the distance between the top of the triangle (A) to the bottom of the move (B). After the market retraces upward,the distance between C to D should equal A to B.
Typically, I find that the market progresses in 6 day moves or fractions of 6 days. So, if the market moves around March 12th like I think it will, the SPY will drop 6 days down from Point A, March 12th to Point B, March 19th. The Fed meeting is scheduled on March 19th and 20th, 2024. So around that time, the market will bounce back up (retrace) between 38.2% to 50% (Point C). It will probably peak on that retracement around March 21st or 22nd before heading down again the following week. It will stop around March 28th just before the Easter long weekend (Point D). After the Easter long weekend, the SPY should bounce back up.
I only use important events or long weekends as beginning and end points as I find chart movements seem to pivot around those days. But I use the daily and weekly chart indicators as barometers as when the market will move.
I use the DMI, MacD, Stoch RSI and MOM as indicators to guide my entries and exits.
EXTRA INFORMATION:
INFLATION: When Bill Clinton was in power, congress changed the definition of inflation and how it was calculated. Why?!? To reduce transfer payments from the government to the people. The inflation calculation changed when Congress implemented the Boskin Commission Findings where it implemented substitution, weighting, and hedonics into the calculation of inflation, thereby manipulating the inflation rate to reduce the transfer payments from the government to the people.
Substitution Effect - We no longer measure the cost of goods and services from one year to the next because of the substitution effect. This effect assumes when the price of something goes up, we will switch to something cheaper. So, if milk goes up, we will switch to powder milk or something cheaper to drink.
Weighting Effect – When something rises too fast, it is assumed people will use less of these things. For example, Health Care is calculated at 17% in the GDP calculation but is only being recorded as 6% of the CPI basket. Because health care costs are increasing so rapidly, the impact of recording a smaller weighting of health care costs means a reduction of reported inflation.
Hedonics – This is supposed to adjust for the quality improvement which leads to greater enjoyment or utility of the product. It assumes new features are always beneficial and are synonymous with falling prices. Hedonics accounts for 46% of CPI. So, if a TV is bought with a new feature, this is synonymous with quality improvement and a greater utility of this product. So, this new feature is synonymous with falling prices.
Added to this manipulation of inflation is the fact that years ago, common purchases such as gasoline, fruits, vegetables, and cigarettes were removed from this already manipulative calculation on the grounds that their prices are volatile. And we know that no one here buys gas or eats fruits and vegetables -- We all walk and eat candy to keep us alive.
If we were to calculate inflation without these manipulative methods, inflation would be much higher, hence increasing transfer payments from the government to citizens. John Williams of Shadowstatistics.com calculates everything like it was in the 1980s. Mr. Williams finds if inflation was calculated like it used to be, then we would have around 10% inflation rate or more as opposed to under 2% rate that is currently being reported every year. Inflation is not reduced just because you calculate it a different way. That is why there is such a huge disconnect between the declared inflation rate and the prices you see in the store.
To illustrate this manipulation of facts and numbers, I will use the calculation of a person's age and the Canadian Pension as an example.
Let's say the government wants to save some money through the Canadian Pension. They decided to implement the Sunday Commission Findings which was a study done by some retired politicians. (This is a fictitious study used just to illustrate the manipulation of inflation.)
In this study, these retired politicians realize the public typically has 2 days off a week. On one of those days the public needs to get errands done but the other day off is used to relax a bit and regroup. Therefore, this commission makes an assumption that there is little to no aging done on that one day where a person relaxes .
So this commission now states that one day a week the public has time off to relax should not be included in the calculation of his age in relation to the Canadian Pension.
Now, the government states a 65 year old who is just about to retire isn't really 65 years old but instead just a little over 58 years old. (Given that 1 day a week does not age you because you relax so there are 52 days/year you relax, multiply that by 47 years (given a person starts working at 18).) That equals 2,444 days or 6.69 years where a person does not age due to the fact he is relaxing on his day off. So a 65 year old is now just a little over 58 years old with this new calculation.
With this 'new' calculation, a 65 year old man isn't really 65 years old and therefore is not deserving of a pension yet.
So now the government does not have to give the man a Canadian pension for another 7 years. Now multiply that number by all the retirees. That's a lot of money saved!!!
That is exactly what this "new" calculation of inflation or the Boskin Commission Findings is doing. It is just a manipulation of numbers just like the politician's Sunday Commission Findings.
KONDRATIEFF WAVE CYCLE - There are 4 cycles to the Kondratieff Wave Cycle; Spring, Summer, Fall and Winter. Each cycle lasts between 24-26 years. This could be the final drop of the 24-26 Kondrateiff wave cycle, but for some reason I do not think it is. I have a sneaking suspicion this is just a temporary drop and it will go back up around 2026 before it makes the final drop. But we will have to wait and see. All I have now, are suspicions.
I suspect it will go down at the peak of the triangle due the weekly indicators showing an overbought signal. I would wait for my daily indicators and weekly indicators to align to confirm an entry point.
In the past, such as the beginning of Feb, 2018 or October, 2018 or even the big drop in 2020, the market dropped 61%, then retraced between 38.2-50% of the previous move then moved back down to another Fibonacci level. You can also find the end of the move by measuring the distance between the top of the triangle (A) to the bottom of the move (B). After the market retraces upward,the distance between C to D should equal A to B.
Typically, I find that the market progresses in 6 day moves or fractions of 6 days. So, if the market moves around March 12th like I think it will, the SPY will drop 6 days down from Point A, March 12th to Point B, March 19th. The Fed meeting is scheduled on March 19th and 20th, 2024. So around that time, the market will bounce back up (retrace) between 38.2% to 50% (Point C). It will probably peak on that retracement around March 21st or 22nd before heading down again the following week. It will stop around March 28th just before the Easter long weekend (Point D). After the Easter long weekend, the SPY should bounce back up.
I only use important events or long weekends as beginning and end points as I find chart movements seem to pivot around those days. But I use the daily and weekly chart indicators as barometers as when the market will move.
I use the DMI, MacD, Stoch RSI and MOM as indicators to guide my entries and exits.
EXTRA INFORMATION:
INFLATION: When Bill Clinton was in power, congress changed the definition of inflation and how it was calculated. Why?!? To reduce transfer payments from the government to the people. The inflation calculation changed when Congress implemented the Boskin Commission Findings where it implemented substitution, weighting, and hedonics into the calculation of inflation, thereby manipulating the inflation rate to reduce the transfer payments from the government to the people.
Substitution Effect - We no longer measure the cost of goods and services from one year to the next because of the substitution effect. This effect assumes when the price of something goes up, we will switch to something cheaper. So, if milk goes up, we will switch to powder milk or something cheaper to drink.
Weighting Effect – When something rises too fast, it is assumed people will use less of these things. For example, Health Care is calculated at 17% in the GDP calculation but is only being recorded as 6% of the CPI basket. Because health care costs are increasing so rapidly, the impact of recording a smaller weighting of health care costs means a reduction of reported inflation.
Hedonics – This is supposed to adjust for the quality improvement which leads to greater enjoyment or utility of the product. It assumes new features are always beneficial and are synonymous with falling prices. Hedonics accounts for 46% of CPI. So, if a TV is bought with a new feature, this is synonymous with quality improvement and a greater utility of this product. So, this new feature is synonymous with falling prices.
Added to this manipulation of inflation is the fact that years ago, common purchases such as gasoline, fruits, vegetables, and cigarettes were removed from this already manipulative calculation on the grounds that their prices are volatile. And we know that no one here buys gas or eats fruits and vegetables -- We all walk and eat candy to keep us alive.
If we were to calculate inflation without these manipulative methods, inflation would be much higher, hence increasing transfer payments from the government to citizens. John Williams of Shadowstatistics.com calculates everything like it was in the 1980s. Mr. Williams finds if inflation was calculated like it used to be, then we would have around 10% inflation rate or more as opposed to under 2% rate that is currently being reported every year. Inflation is not reduced just because you calculate it a different way. That is why there is such a huge disconnect between the declared inflation rate and the prices you see in the store.
To illustrate this manipulation of facts and numbers, I will use the calculation of a person's age and the Canadian Pension as an example.
Let's say the government wants to save some money through the Canadian Pension. They decided to implement the Sunday Commission Findings which was a study done by some retired politicians. (This is a fictitious study used just to illustrate the manipulation of inflation.)
In this study, these retired politicians realize the public typically has 2 days off a week. On one of those days the public needs to get errands done but the other day off is used to relax a bit and regroup. Therefore, this commission makes an assumption that there is little to no aging done on that one day where a person relaxes .
So this commission now states that one day a week the public has time off to relax should not be included in the calculation of his age in relation to the Canadian Pension.
Now, the government states a 65 year old who is just about to retire isn't really 65 years old but instead just a little over 58 years old. (Given that 1 day a week does not age you because you relax so there are 52 days/year you relax, multiply that by 47 years (given a person starts working at 18).) That equals 2,444 days or 6.69 years where a person does not age due to the fact he is relaxing on his day off. So a 65 year old is now just a little over 58 years old with this new calculation.
With this 'new' calculation, a 65 year old man isn't really 65 years old and therefore is not deserving of a pension yet.
So now the government does not have to give the man a Canadian pension for another 7 years. Now multiply that number by all the retirees. That's a lot of money saved!!!
That is exactly what this "new" calculation of inflation or the Boskin Commission Findings is doing. It is just a manipulation of numbers just like the politician's Sunday Commission Findings.
KONDRATIEFF WAVE CYCLE - There are 4 cycles to the Kondratieff Wave Cycle; Spring, Summer, Fall and Winter. Each cycle lasts between 24-26 years. This could be the final drop of the 24-26 Kondrateiff wave cycle, but for some reason I do not think it is. I have a sneaking suspicion this is just a temporary drop and it will go back up around 2026 before it makes the final drop. But we will have to wait and see. All I have now, are suspicions.
Trade closed manually:
This trade did not go as I suspected. The weekly indicators have changed and are looking bearish, so I suspect the market will go down between now and within about 1 month. Also, in a Presidential election year, the market tends to dip briefly in May to June before going back up in July until the election. We are also seeing a descending triangle forming which means the market could decline or go back up. I will be drawing an updated chart shortly.