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Robert McHugh

Robert McHugh

Robert McHugh Ph.D. is President and CEO of Main Line Investors, Inc., a registered investment advisor in the Commonwealth of Pennsylvania.

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Historic Stock Market Volatility Over the Past 2 Years Warns of a Coming Significant Decline

In spite of the historic sideways price action we have seen the past month, if you go to our chart on page 32 we show that the past two and three-quarters years have been one of the most volatile stock market periods in history!

There were ten different trends from 2014 through August 2016 greater than 990 Dow Industrials points, five rallies and five declines, the average trend 2,141 points. This has been a market timer trader’s melatonin dream. Over the course of this period, our Platinum trading program earned $241,000 in net profits. This volatility did not form a sideways continuation pattern where stocks are pausing inside a larger rising trend, but rather formed a Megaphone Top pattern which may need a bit more upside to complete, meaning the next major trend is fast approaching, it will be down, and could be over 3,000 points!

Trend # 1: 990 point Decline from 9/18/13 to 10/9/13

Trend # 2: 1,869 point Rally from 10/9/13 to 12/31/13

Trend # 3: 1,248 point Decline from 12/31/13 to 2/5/14

Trend # 4: 2,010 point Rally from 2/5/14 to 9/19/14

Trend # 5: 1,496 point Decline from 9/19/14 to 10/15/14

Trend # 6: 2,496 point Rally from 10/15/14 to 5/19/15

Trend # 7: 2,981 point Decline from 5/19/15 to 8/24/15

Trend # 8: 2,607 point Rally from 8/24/15 to 11/3/15

Trend # 9: 2,527 point Decline from 11/3/15 to 1/20/16

Trend # 10: 3,187 point Rally from 1/20/16 to Present

The only question is, does it start next week, or in September or November? A new Sell signal in our Purchasing Power Indicator and our Secondary Trend Indicator will confirm when this coming powerful decline has started.

Dow Daily Chart

The next chart shows that the S&P 500 has also formed a Megaphone Top pattern from 2014 that is very close to completion. This pattern has a minimum downside price target of 1,960ish.

S&P500 2-Hour Chart

Dow Industrials Monthly Chart

Given the massive size of this ominous pattern, it is no surprise that the ultimate sweet spot of the coming plunge would take its time to arrive. Time proportionality requires this. However, this pattern didn’t go anywhere, it is still staring us in the face. The danger remains. The rally since January 2016 did nothing to change the above ominous Bear Pattern. This multi-decade Jaws of Death pattern has not been erased, compromised, or changed.

A massive economic decline and stock market plunge is in its infancy.

We are now on HIGH ALERT!!!!! Grand Supercycle degree wave {IV}’s decline has likely started, or is about to start. The Industrials will plunge from the upper boundary of the Jaws of Death pattern, the top for Grand Supercycle degree wave {III} up. Grand Supercycle degree wave {IV} down, which could last 5 to 7 years, is now underway, or about to start.

 


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Dr. McHugh's book, "The Coming Economic Ice Age, Five Steps to Survive and Prosper," is available at amazon.com at http://tinyurl.com/lypv47v

"Jesus said to them, "I am the bread of life; he who comes to Me
shall not hunger, and he who believes in Me shall never thirst.
For I have come down from heaven,
For this is the will of My Father, that everyone who beholds
the Son and believes in Him, may have eternal life;
and I Myself will raise him up on the last day."

John 6: 35, 38, 40

 

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