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The Golden Ratio: Projecting the May-June Top, Part 2

Last week, we kicked off the series by examining the 14-week cycle tops which projected a top on or about May 24, 2011. This week, we'll investigate a natural cycle which, as I discovered, is reproducing itself in the stock market and projects a top on June 13, 2011.

Please consider the following two charts:

SPX 2007-2009

SPX 2009-2011

To summarize the color-coded lines:

Color Chart 1 Date Chart 2 Date
Black October 11, 2007 January 15, 2010
Red January 22, 2008 April 28, 2010
Blue May 19, 2008 August 26, 2010
Green November 20, 2008 March 1, 2011
Pink March 9, 2009 June 13, 2011

The first thing each set of lines has in common is this: they are exactly 571 trading days apart.

The second thing each set of lines has in common is they represent important turning points:

Color Chart 1 Chart 2
Black Top Top
Red Bottom Top
Blue Top Bottom
Green Bottom Top
Pink Bottom ??

As you can see, except for the black pair of lines, the other turning points have been opposite each other. 571 days later, bottoms become tops and tops become bottoms. If this 571 day cycle holds true, then the pink line on June 13, 2011 will be at or near an important top.

The last thing these set of lines has in common is that they all represent the Golden Ratio (1.618 to 1) when compared to the length of the 2007-09 downtrend. It took 353 trading days to fall from the October 11, 2007 peak to the March 9, 2009 trough. 571 divided by 353 is 1.618. The Golden Ratio which appears in nature seems to be reproducing itself in the stock market.

Next week, we'll examine top projections based on Money Flow Ts™. Until then, use caution in your investments and manage your risk wisely.

 

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