US Stock Market Will Likely Drop 5% by Next Week!

By: Brad Gudgeon | Wed, Apr 15, 2015
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Last weekend, I expected the US stock market to drop suddenly from Monday into Tuesday. While I expected about close to a 2% drop, we got closer to a 1% drop instead (I give myself a C grade there). Out of this cycle low Tuesday (Gann 4/8/12 and Wall Cycle 22.5 TD low), we rallied 1.3%. I also talked about the prevailing 32 TD top due Thursday this week, which I believe came a day early on April 15th. There has been much talk about Lindsay's methods, and his method agrees with me that we made an important top on April 15th.

The charts below show that a 5% drop is imminent into April 24th, which follows the recent 7 Trading Day drops, (especially notable is the early to mid December drop of 5%). It also agrees with the 8 TD cycle, as well as the larger Gann 16 TD +/- 4 cycle low. The e-wave set up is there, and we are now going from Wave (b) to Wave (c) of an a-b-c type drop from the March 2nd top to April 24th (a 31 TD low from Mar 11).

S&P500 Daily Chart
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Dow 30 Daily Chart
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Of note: the NASDAQ failed to keep up with the Dow and SPX today creating an inter-market bearish divergence. There are also important reversal signatures on the "astro" scene this week. Notable is Pluto Retrograde on April 16 and Mars sq. Jupiter on April 17. According to Merriman, Pluto rules debt and bonds. Is the FED going to say something that spooks the market? Stay tuned.

In my opinion, this would be the time to buy puts or heavily leverage positions to the down side. The odds favor the bears here... at least into April 24th... and after that? Well, it is after all a bull market, right? Yeah, buy the dip... this is the mantra going forward. I don't see anything to change that viewpoint ... yet.

 


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Brad Gudgeon

Author: Brad Gudgeon

Brad Gudgeon
BluStar Market Timer
Blog
eaglesoveramerica.com

BluStar Market Timer Investment Philosophy: The stock market is currently in a technical Elliott Wave Bear Market Rally. It has been exhibiting A-B-C type waves instead of the normal 5 Waves since the market topped in 2000. According to "The Original Works of R.N. Elliott", we are due for a move down to about the S&P 500 442/443 area in the next few years. In my opinion, this is no longer a buy and hold market, but a traders' market. We mainly swing trade the market with funds and ETF's, but otherwise trade according to the market's disposition and to the traders' discretion. For the year 2014, BluStar Market Timer is rated #1 according to Timer Trac. http://www.blustarmarkettimer.info

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