In my previous posts dated 08/26 and dated 08/30 (click on the dates (links), I had forecasted to be ready for a reversal/decline. Markets did exhibit a pattern, called "Lost Motions", a term coined by W.D. Gann, where market just peek a little higher or lower than expected price levels or time reversal levels. Stock markets were timed to start the reversal on Aug 26 or Aug 27. Instead, markets edged higher a bit more, the next day on 08/28 and then started reversal the same day. Price levels were exactly what you would have expected to have offered the resistance. For S&P-500 it was $1,200 (+/- some change), which also coincided with price level of 08/16-08/17 highs. S&P-500 just lingered a few points higher than 08/16 highs. Heavily Tech-laden NASDAQ Composite which suffered the biggest decline in the August, had to show the law of Nature, i.e, the reactionary, the biggest rally. Therefore, it had eclipsed the highs of 08/16-08/17, only to fool the retail investors, when it was attracted to the prices at the the neckline of recent H&S pattern and where it was rejected.
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| Stock Market Forecast 9-1-11, Nasdaq Composite Chart |
I believe that it was the text-book rejection at the level, especially its occurrence within the orbs of the time cycle for reversal. Thus, markets are going to have another leg down, as previously stated in my other posts earlier.
As a matter of fact, September and October may present themselves, as more painful for the investors, and traders. As this time period portends rather higher volatile time period for the stock markets, especially after such extremes levels of credit, liquidity, and sovereign debt problems around the Europe.
