I have been deleting and cleaning out my gmail so I have an empty email inbox.
I came across an old report that was emailed to me many years ago, the Vitruvian Market Letter.
After reading it I was surprised to see that he is projecting a major top in 2023 on July 11, 2023 which is 9000 days from Oct 19, 1987 and 4000 days from August 16, 2007 (the lehman panic)
August 2016
Special Report
We believe the U.S. equity markets are now completing their entire advance from the March 2009 lows and will usher in a 17 month bear market into the early 2018.
Major highs require major relationships with long term time spans. And that is exactly what we have come August 23, 2016. That date should complete the final high in the final indexes, namely the Nasdaq indexes, and end the 7 year bull market in U.S. Equities from March of 2009. Come August 23rd or 24th (ideally the 23rd), the final market indexes, the Nasdaq 100 and Composite should complete their entire advances from their 2009 lows.
In the attached charts we will discuss the reasons for this major high. The first is the connection between the February 1966 high in the Dow Industrials and the low in May of 1884, known as Grant’s Panic. Grant’s Panic was the result of the breakdown between banks and the brokerage firm of Grant and Ward when banks realized that many of Grant’s and Ward’s obligations were unsecured. This caused a panic and a run on many banks that reached panic levels on May 5, 1884, although many banks went under in the weeks and month following. The distance in market trading days between the panic low of May, 5, 1884 and the February 9, 1966 high in the Dow Industrial Average totals 20,621. Taking this distance and simply multiplying it by the basic golden ratio of 1.618034 totals 33,365.48 market trading days, taking us from May 5, 1884 to August 22, 2016, (33,365) or August 23rd (33,366). In calendar day terms, the projection is similar: May 5, 1884 to Feb 9, 1966 totals 29,864 calendar days. Multiplying 29,864 by 1.618034 equals 48,321 which equal the distance from May 5, 1884 to Monday, August 22, 2016.
Chart 1 display’s this distance by taking 20,621 and multiplying by .618034 and then adding it to the 1966 Dow high to arrive at the same projection. That distance is 12744.48 days which we have rounded to 12745 (for reasons we will discuss below).
The number of trading days, 20,621, is almost exactly double a very significant projected time span. We have very strong reasons to believe that a major high will be seen in the summer of the year 2023. For disclosure reasons, we are not going into details about how we arrived at this projection, but will show a series of thousand day time spans that also project this exact day. Back in the 1980’s and into the year 2007, there was a very interesting series of market trading days that each spanned 1000 market days apart. The first was the distance from the ‘balance point’ of the 1983 Dow and S&P highs to the 1987 panic day of October 19, 1987. That distance was 1000 market trading days apart. Then there was the 5000 market trading day distance between the October 19, 1987 panic and the Lehman Subprime Mortgage Panic of August 16, 2007 where the S&P lost almost 9% over a 6 day period (intraday). We calculate there should now be a another major inflexion point, which we project to be a major high, 9000 days after the 1987 panic and 4000 days after the Lehman panic.
One simple example we can use to create the projection to this high in the year 2023 is taken from the 1966 Dow high as well. The distance from the February 9, 1966 Dow high to the August 16, 2007 Lehman panic, for example, is a total of 10474 market trading days. Multiplying 10474 by 1.382, a standard golden ratio, creates a distance of 14475 market days. The difference between 14475 an 10474 is 4001, meaning there should be another market inflexion point 4001 market days after the 2007 Lehman panic, one day after our long term projection into the year 2023.
With all of that said, key point to be noticed here is that the 20,621 trading day span from 1884 to 1966 is exactly half of the time span from the August 12, 1982 Dow low, a major bear market low, to our projection in the year 2023. Chart 1 displays this distance from 1982 to the year 2023. This time span is a total of 10,311 trading days, which when doubled, equals the distance of 20,622, from 1884 to 1966. Keep in mind; we are talking about extraordinarily long periods of roughly 82 and 41 years. Another way to arrive at the same projection is to take the 10311 trading day period from 1982 to 2023, multiply it by 1.618034 and then again by 2, arriving at a total of 33,367 trading days. Adding that distance to the 1884 low yields Wednesday, August 24, 2016. So fractional differences in time spans of this duration can often throw a projection off by one or two days, but other work discussed below suggests the focal point to be Tuesday, August 23, 2016.
Another corroborating projection is that of the 2002 low to August 23, 2016, a total of 3491 market trading days. Often in the stock market we see significant market moves reflect roots of whole numbers, and those numbers are typically Fibonacci numbers. We often see square roots or cubed roots of basic Fibonacci numbers, but have seen some moves go as far as the 5th root of a number. A
good example is the 4th and 5th root of the number Fibonacci number 8, which are 1.13878 and 1.06714. There are a significant time spans in history of 11,388 and 10,671 market trading days (not shown) that are exact to the day, even spanning decades. We have to attest we have seen it more than a few time so we think that it is more than coincidence. Here the distance from the 2002 low to the same point we have discussed in the year 2023 is 5220 trading days. Dividing that number by the cubed root of 5, 1.4953, yields 3491, which is the distance in trading days from the 2002 low to August 23, 2016.
In order to confirm a major market high, there should also be some connection to other major highs, particularly the most recent highs set in the year 2000 and 2007. If we look at those highs in chart 2, they can be measured from the 1967 balance point, which is the midpoint between the Feb 9, 1966 Dow Jones peak and the S&P peak of December 2, 1968. The midpoint in calendar days is July 7, 1967 which is almost exactly 35 years from the great depression low of July 8, 1932, just for reference.
Chart 2 shows the balance point of the 2000 Dow and S&P highs occurring 8239 market days from the 1967 balance point. The 2000 balance point is the midpoint between the January 14, 2000 Dow high and the March 24, 2000 S&P high. Also shown is the balance point between the 2000 and 2007 highs, which itself is 9211 market days from the 1967 balance point. Chart 2 shows the relationships between these two moves to be 1.118 to 1, as represented by the two legs AB and AC on the golden mean triangle on Chart 2. The number 1.118 is also half of 2.236, the square root of 5, which is the basis of the golden ratio 1.618034. We now see the markets creating another ‘balance point’ between the Dow / S&P of August 15, 2016 and what should be a final high in either or bother of the Nasdaq Indexes on August 23 or 24, 2016. Here is why:
We calculate the balance point to be 12,389 market trading days from the 1967 balance point. That distance is reflected in the golden mean template at the bottom of chart 2. The template shows the distance from the 1967 balance point to the 2000 / 2007 balance point, to be a distance of 9211 trading days displayed on segment AX. The adjacent and far left segment, AZ displays a distance of 12,389 trading days. Adding 12,239 trading days from the 1967 balance point projects a ‘date’ of August 18, 2016. This balance point also happens to be exactly 11,000 market trading days from the January 11, 1973 high in the Dow and S&P. Since the Dow and S&P topped on Monday, August 15, 2016 and the balance point projection is 3 days afterward on August 18, 2016, then the final highs in the market indexes should occur 6 or 7 days after the Dow and S&P high. Dividing those distances, 6 or 7 by two and adding them to the August 15th highs creates the balance point. This means that the final in highs in the remaining indexes, the Nasdaq Composite or the Nasdaq 100 should be seen in August 23rd or 24th to complete the balance point high and complete the end of the bull market advance from the 2009 lows. Another point of corroboration and interest is that of the 11,000 day span between the 1973 Dow and S&P high and the balance point. The date we discussed in the year 2023 is exactly 12,732 market trading days from the 1973 high. Since we are completing 11,000 market days from the 1973 high now, we leave another 1732 trading days into the year 2023. As we
suggested before, square roots of Fibonacci numbers often reflect market trading day spans. The number 1.732 is simply the square root of the number 3. It is also worth noting to, that the 12732 trading day distance from the 1973 high to the year 2023 is also reflected in the ratio 1.2732, which is 4 divided by Pi, 3.1416. That’s a topic for another day, but also corroborates the significant of the point in the years 2023.
Our last chart, chart 3, shows potential symmetry between major moves of past few years. The first established was the January 2000 Dow peak to both of the 2008 and 2009 lows. The first low was seen on November 21, 2008 in the Nasdaq 100 index and the second on March 6, 2009 in the Dow, S&P and Nasdaq Composite indexes. The duration of those time spans are 2227 and 2297 market days respectively with the lows being 70 market days apart. Taking the distance of 2227 market days from the 2000 Dow high to the 2008 Nasdaq 100 low, and then adding to the October 11, 2007 Dow and S&P top, projects a date 1 day after the August 15, 2015 S&P and Dow high and 2 days before the projected balance point we are calculating. We believe the ‘ideal’ time span the market is looking for is 2228 market days, as we think it’s derived from the 4th root of the number 5, 1.2228445. 2228 trading days after the October 11, 2007 highs projects a date of August 17, 2016, one day before our balance point projection. So we will see here how the market highs eventually play out to determine whether or not this projection from 2007 is significant (and can be used in further projections).
What is also compelling is the distance between the 2008/9 lows and what we project to be the bear market low in 2018, and this distance from the 2007 highs may relate to that. Our trading day count points to a long term low in January of 2018. It also creates a symmetrical mirror image of the 2000 high to the 2008 and 2009 lows. If you take the distance from the 2000 Dow high to the 2008 Nasdaq 100 low, 2227 market days and add it to the 2009 low you arrive 1 day short of a long term projected low in January of 2008. Similarly, if you take the distance from the 2000 Dow high to the 2009 Dow, S&P and Nasdaq Composite lows and add it to the 2008 Nasdaq 100 low you also arrive 1 day short of our projected low. The ideal low, we think arrives 2228 market days from the March 6, 2009 low completing the symmetrical relationships shown in Chart 3. This means that if the markets are topping here, which we think they are, then we have in front of us a 17 month bear market lasting into January of 2018.
Kevin W. Murphy is the author of this newsletter.
He can be reached at kwmurphy@bellsouth.net
