“God does not care about our mathematical difficulties. He integrates empirically.” -- Albert Einstein
“I figure things by mathematics. There is nothing mysterious about any of my predictions. If I have the data I can use algebra and geometry and tell exactly by the theory of cycles when a certain thing is going to occur again.” -- W.D. Gann
Einstein equated gravity to an accelerating rocket. In such a rocket there will be weight and falling. The rocket floor will move upward to meet something that is “dropped.” That's the equivalence principle. Einstein’s ideas revolved around accelerated motion and its effects. He detailed what's equivalent to gravity, explaining that actual gravity though is curved space. That's Einstein’s understanding of real gravity. Space isn’t curved for the accelerating rocket. They are two different things. Einstein, through curved space-time geometry, explained the curvilinear paths of falling objects; why they follow curves.
There's a difference for an accelerating rocket and one just sitting on the earth’s surface. One's moving and experiences weight and the other isn't but still experiences weight. Weight for the accelerating rocket can be calculated by its rate of change velocity. But there's no rate of change of something that isn't moving. Without motion there can be no rate of change.
If one of the foundations for Einstein’s theories is that time isn't a straight line, but curvilinear, then it begs the question: Do cycles repeat?
If space-time is curved in general relativity in both acceleration and gravity, are space and time the same thing? In other words, in relation to the market, are time and price one in the same and when they "meet" does change or the possibility of change take place?
If space-time is curved in general relativity in both acceleration and gravity, hence, the equivalence principle, both gravity and acceleration are the bending of space-time.
In other words, the larger the acceleration, the momentum, the larger the dislocation in places like the market place?
More recently, Bernanke warned that “the recent pace of growth is less vigorous than we expected” and that the economy “remains vulnerable to unexpected developments.”
The confidence associated with the stimulus and that the government "is in charge here" is in jeopardy of becoming a con.
The burst of stock market strength is in danger of becoming a bust.
And, the timing is fascinating, as the first real week of trading in September comes to a close. Walking through all the major S&P swings from 1941. It's apparent that 540-degree moves in time and in price are countertrend or corrective moves of a major degree.
September 9, 2010, is 540 degrees in time from the March 6, 2009 low. The 1104 close on the S&P is 540 degrees down from the August S&P pivot high of 1313/1314 in August 2008, the pivot high just prior to the Lehman Waterfall.
Moreover, the price of 1110 aligns with September 9 as shown on the Square of 9 Chart below. By definition then, since September 9 is opposite March 6, the date of the low is opposite 1110 as well. More importantly, remember that the March 6 low was 90 degrees of 666/667, the price of the low on March 6. Time and price "squared out" at the low.
By definition then, September 9 must square 666/667 as well since it's opposite March 6.
nterestingly, yesterday the S&P gapped up to 1110, precisely making an opening high. At the same time the SPDR S&P 500 (SPY) tagged its overhead 200-day moving average (the SPX marginally missed kissing its 200-dma), with the SPX "Pinocchioing" a declining trendline from this year’s April high and August high.
The normal expectation would be for the longs to take some profits and the SPY to pause at the 200-dma, especially on a gap open following a seven-day run. You can’t get too bearish on that alone. However, despite an up day in the S&P, many of the usual suspects tailed off from the opening and stayed in the red.
What's also interesting about September 9 is the pattern from 1930. I’ve shown the chart of 1930 (above) a few times this year as April marked the retrace high after the November 1929 crash low. But a friend reminded me last night that the second important pivot high in 1930 occurred on September 10.
So in 1930, there was an April high, the high for the year, like 2010 so far. There was a sharp sell-off into early May, like 2010. There was a sharp decline into late June/early July, like 2010. Then there was a last burst of strength off an August low. Like 2010?
Do cycles repeat? Do patterns repeat?
Time is the most important factor in determining market movements, and by studying the past records of the averages or individual stocks you will be able to prove for yourself that history does repeat and that by knowing the past you can tell the future. There is a definite relation between time and price. Now, by a study of the time periods and time cycles you will learn why tops and bottoms are found at certain times and why Resistance Levels are so strong at certain times and bottoms and tops hold around them. The most money is made when fast moves and extreme fluctuations occur at the end of major cycles.-- W.D. Gann
After the crash into November 21, 2008, there were many on the Street concerned about a repeat of a 50% retracement rally into April 2009 like April 1930. Remember that Bernanke is the preeminent scholar of The Great Depression. Needless to say this fact was not lost on him. The Fed has the same charts we do. Remember that a new president had just been sworn in during the first quarter of 2009.
What better way to "abort a repeat" of the psychology of the cycle from 1930 than "allowing" the market to flush out into March/April 2009?
There's an often used quote of Mark Twain’s as pertains to the market that history, while it may not repeat exactly, often rhymes. It may have become a Street cliché at this point. Be that as it may, clichés are often so called because they are so true.
I can’t help but wonder if the market "skipped a beat" and the April high in 2010 rhymes with the April high in 1930. As traders like to say, “plus or minus one.” What’s one iteration on a yearly time frame?
The bottom line is that the price action following the test of the declining trendline yesterday must be carefully observed. Either the market is on a precipice or a platform. If 1110 can be captured, especially on the important weekly closing basis today, the implication is an extension higher, as offered in yesterday’s piece.
Do cycles repeat? Yesterday I saw a piece on the news that the first time the US was attacked wasn't 9/11 in 2001 but September 10, 1942, when a Japanese bomber dropped two bombs over Oregon. One bomb started a forest fire. The other -- no one knows. September 10, September 11?
It's remarkable that the attack in 2001 came 60 years after Pearl Harbor -- the Master 60-Year Cycle according to Gann (and the Mayans).
I can’t help but wonder how short the fuse is on the situation regarding the move to burn the Koran on the ninth anniversary of 9/11. Nine years, as in Square of 9 charts? The chart is so called because the first square ends with the number 9.
Conclusion: From March 6, 2009, to the April 26, 2010 top is 416 calendar days. On the Square of 9 Chart, 416 aligns with August 30. The market exploded up from the key 1040 level on August 30. The market is respecting this vibration. It could indicate an important low, but momentum and velocity need to confirm the idea of higher prices. Moreover, the message of the 416/August 30 vibration is also that any break of that day's low should see a powerful decline. In other words, the importance of 1040 is underscored, as if we needed one more piece of evidence to tell us that 1040 was the Maginot Line.
At the same time there are a number of good reasons, as you know, cyclically, and otherwise, enumerated in this space that indicate a top of significance anywhere between here and September 22. Add to these cycles and patterns the VIX Compression Sell Signal shown this week and multiple Hindenburg Omen signals, and caution is warranted.
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