Over the last few weeks, I have been saying to prepare for a mini crash in the 3rd quarter. That is from the “time profiles” done by my partner at sentiment timing Woody Dorsey. But the 3rd quarter is a pretty big window to be trying to trade a mini crash. That is where combining “price and time” comes into play.

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Let’s start with the “bigger picture” view first and then work out way into “time and price”.  Woody has identified this “black hole” event (mini crash) since May 2015, but since then, another “black hole” has popped up on his radar screen. This should be concerning if you are a perma bull, because the last “black hole” he predicted a month before it happened, saw the SPX drop 200 points and then rallied 280.

 

Now the bulls are going to have to defend not (1) but (2) of these mini crashes in the 3rd quarter. I am going to try and help you get at least on the right side of one of them is this piece. So we know we have (2) black holes mini crashes pending in the 3rd quarter. Now Sentiment Timing also provides shorter term “time profiles” where the market reversal would be scheduled to hit and one of them is for next week.  Now that we have the “time piece” in place, let’s try and work price into the equation.

 

There are no bearish divergences in place for the SPX in place when looking at a 60 minute period on the SPX. That would suggest there is still another push higher left in this rally. (The SPX is at 2080 as I type) There is also an open gap that is at 2102 and if history is going to be our guide, it will get filled before any meaningful drop starts.

 

Once we see bearish divergences form on the 60 minute period-and the SPX is within the “time profile turn date) I would expect the 2101-2106 to come into play-with an outsider top at 2118. But anywhere between that zone-maybe starting a short position could pay off handsomely.

 

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