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Where We Are

October 24th, 2008 at 8:25am · 13 Comments

 In 1997 I was publishing a service entitled Fax-On-Time to clients interested in short-term market movements. As the Asian panic unfolded, I used my knowledge of the lunar nature of the 1929 and 1987 crashes to inform clients that the low should occur on October 28. Friday October 24 saw a huge reversal and rally on Wall St. as well as Asia and many assumed the bottom was in. It was not. Monday October 27 was a massive down day on Wall St. and the subseqent low in Asia was made October 28 while Wall St. was closed overnight.

click chart to enlarge

The timing of the Asian panic low was dramatic confirmation of my theories first outlined in the book, The Spiral Calendar, published in 1992.  In the following months I wrote the research paper, Autumn Panics: A Calendar Phenomenon, which received the Charles H. Dow award for 1998 for best technical analysis research paper from Dow Jones, Barron’s and the Market Technician’s Association. The paper is available to be read here at the MTA site. The paper introduced the concept of the ‘dark days’ – that period of time in the autumn when markets are vulnerable to panic.

Now we arrive at 2008. Panic is once again enveloping not only Wall St., but markets world wide. The point of maximum panic as calculated by my research is this Sunday, October 26.  With markets closed for the weekend, today’s selling should be the final washout in The Panic of 2008.

Where We Are is that the markets are once again confirming my original research into the effect of the lunar calendar of mass psychological behavior.  The panic is at its maximum right now. Beginning next week, calm and more gentle price swings will slowly but surely return to the markets.

click chart to enlarge

Tags: Editorial · General Market Commentary · S&P 500 · Solunar Model

13 responses so far ↓

  • 1 Jon Eeles // Oct 24, 2008 at 9:19 am

    With the dark days falling over the weekend perhaps we will be spared the spectacle of the world pulling its own teeth out this time round. Fortune is smiling on us again.

  • 2 libertas // Oct 24, 2008 at 9:33 am

    Amazing, Chris. Just amazing.

  • 3 alexk // Oct 24, 2008 at 9:45 am

    If you absolutely *have to* trade on Sunday, the Tel Aviv Stock Exchange will be open (cf http://www.tase.com). I sometimes have a look on Sunday evening to see if there might be a gap opening on Monday.

  • 4 muellerjoerg // Oct 24, 2008 at 9:48 am

    Chris: I’m with libertas. Just amazing.

    BTW I’m still not sure what to make of the proximity between the Dark Days and the Nov. Spiral Calendar turn date. We may even make a final lower low then, not? I’m still very unsure and I can certainly feel the panic sentiment on me, too. Fortunately, I was prepared thanks to your work. But still, I cannot escape the anxiety around me either. I actually found out it helps to tune out the noise: CNBC, blogs (except for this one and Tom Drake’s). I even hardly watch news any more.
    Joe

  • 5 NickG // Oct 24, 2008 at 9:57 am

    I’m not sure there has been proper panic in equities. Dow only just making a new closing low for instance (and that’s assuming we end down 2.8% 0r more today). Europe panicky today but volumes not really high. Currencies have seen some panic but with the new moon not til Tuesday is there not a chance we get a “better” panic on Monday? I would like a proper 10% down day in USA, or more actually. I think we need circuit breakers to kick in, then open again and see more falls.. That would be panic in my book.

  • 6 chris // Oct 24, 2008 at 10:04 am

    I don’t think we get a ‘better’ or more ‘proper’ panic as the markets will be closed when that is most likely to occur. Also, because there has been so much selling for so many months, the profile of the market is very different from the crash years of 1929 and 1987 when all-time highs were close to the crash point.

    I think this morning’s high VIX reading of 89.53 is all the panic needed.

  • 7 tobject // Oct 24, 2008 at 10:11 am

    Chris,
    how about 7-28 lunar day ends
    late Monday?

  • 8 tobject // Oct 24, 2008 at 10:14 am

    Have u seen comparison with
    1937
    http://www.elliottfractals.com/Spooky_Fractal_2008.jpg

    as well as 1929

    http://api.ning.com/files/vMcap*7BouNbiYSAWqLtwt8k-Tx-dw*d8BIpTrro56ioDHJTpGzI*KZRjIiIZYLHl36fWrpiLbQRQVPyj2zOhpyQKvmDDI0R/crash.gif

  • 9 chris // Oct 24, 2008 at 10:28 am

    This morning’s low may very well be the bottom. There’s no requirement for further weakness.

  • 10 muellerjoerg // Oct 24, 2008 at 10:56 am

    Chris: what to make of the Nov. SC turn date?

  • 11 ramparikh // Oct 24, 2008 at 11:54 am

    Chris,

    Can you please expand on the Nov. turn date that I read in your research, if this is the bottom, do we test it again and go up on the turn date?

    Thank.

    Great JOB!

    RAM

  • 12 Jon Eeles // Oct 27, 2008 at 6:00 am

    Chris. in the period after 26th October untill the end of this year, the advance in your Solunar model takes a five wave form, which for elliotticians implies at least a larger three wave move lasting perhaps into spring of next year. is there evidence to support this scenario in next years Solunar model ? Do you think this is likely? It’s all red in the UK this morning (27th) looking for the turn later today.

  • 13 chris // Oct 27, 2008 at 7:50 am

    Jon, the smaller wiggles in the Solunar Model likely don’t have value. It’s really about identifying periods of seasonal strength or weakness where the model gets away from ’50′ are on that chart.

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