It's All About Timing

thetechnicaltake's picture

The markets are all about timing. In this case, 55 weeks.

Figure 1 is a weekly chart of the S&P Depository Receipts (symbol: SPY). The indicator in the lower panel is a composite of two of our Rydex indicators that assess investor sentiment on an intermediate term basis. When the indicator is green, investors are overwhelmingly bearish on the equity markets, and as history shows, this is the time to be bullish. When the indicator is red, investors are extremely bullish, and the market momentum will flatten out. The time frame of the chart goes back to the March, 2009 bottom.

Figure 1. SPY/ weekly

Now focus on the green vertical lines that stretch across the price chart and indicator. Each green line is placed on the first week of the bull signal that led to a market bottom. Now focus on the red vertical lines. Each red line is exactly 55 weeks (a Fibonacci number) after the bull signal. This past week was the 55th week from the previous bull signal. The prior two cyclical bull moves since 2009 also lasted about 55 weeks from bottom to top. It should be noted that the length of bull moves in the prior bullish market cycle from 2003 to 2008 averaged approximately 34 weeks (another Fibonacci number) from bottom to top.

This is more evidence that the current bull run is nearing completion. As stated for a couple of months now, the price action is consistent with a market top.


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