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Posts Tagged ‘crash’

The bitcoin crash

Posted by Dan on February 5, 2018

All eyes have been on Bitcoin BTC and other crypto currencies recently. After reaching a peak near $20000 BTC is now down to $8000. So what’s next?

Here is what I wrote about bitcoin last August:

A sustained breakout above $4000 that quickly heads for $5000+ would start a parabolic move like in 2013. And then it can go above $10k. A failure to do so would probably give us a peak near my $4246 target and be followed by a significant decline when traders notice that the steep rally has ended.
Both scenarios have 50/50 chance at the moment, so if you hold bitcoin from a much lower cost base then I would sell some and hold the rest at zero cost base. A tulip mania type move is possible here and then bitcoin could reach $10k or $20k before a big panic.

Here we are. BTC reached $20k and is dropping quickly, but investors are not really panicking (yet) and that’s a reason for concern. So, let’s have a good look. Here is an update of the long term chart I posted in August:


The rate of change is slowing down, which is normal after a move of this magnitude. The best case scenario is now a continued climb within the more sustainable pale green trend channel. But that would mean a drop to $2000 if the lower bound of this channel is to be tested. A failure to hold this channel would probably tell us that BTC is going to near zero. That’s the big picture.

Of course, Bitcoin has come back from similar drops on several occasions. But that’s the problem here. Too many investors/speculators seem to believe that will happen again and that’s why there is little or no panic, even after a 60% crash. Many traders are just doubling down on their losses, encouraged by “expert” predictions that keep talking about $50k, $100k BTC in the near future (e.g.

Small investors’ enthusiasm and confidence has become too high and that never ends well. As I pointed out on Twitter near the highs in December, Bitcoin has become more popular than SP&P 500 ($SPY) on sites like Stocktwits:

10 Days later BTC printed its current peak. But traders’ appetite for BTC has not cooled down on Stocktwits. The 7 day average message volume is now regularly above 30,000 and there are 85,700 people who are watching BTC. That’s more than the 73,500 investors who watch SPY (S&P 500 etf) on the site. By the time BTC finds a real bottom I would expect those numbers to be a lot lower.

Ongoing popularity in the face of a significant drop is usually a sign that there is more pain to come. This has happened before in other popular manias and it typically ends in a similar fashion. A first 50% crash is met with denial and after a few months of stabilizing prices (which many traders interpret as a last chance to buy before the next explosive rally) the so-called “waterfall declines” start, often ending 70-90% below the peak prices.

Classic example include the Dow in 1929:


Gold in 1980:


Nikkei in 1990:


Nasdaq in 2000:


And even individual stocks or sectors. Remember 3D printing in 2014:


We always see the same thing. A huge run-up that triggers traders’ imagination of easy riches followed by a 50% crash that is seen as the next great buying opportunity. A few months of stabilizing and rebounding prices convince the remaining skeptics that the bull market is continuing. And that’s how the stage is set for the second phase of the crash.

If Bitcoin follows the same pattern by bottoming in the coming weeks followed by what looks like a healthy rebound then remember those charts and be careful. I will keep posting my observations on Twitter until I do another post on crypto here on the blog.

Good luck to all.

PS: Good question by a reader: Could it be that BTC moves quicker and that we are already in the waterfall declines? A: Yes, that’s possible. Here is a daily chart, 50% drop and a one month rebound:


Posted in Market Commentary | Tagged: , , | Leave a Comment »

LT wave for August

Posted by Dan on August 1, 2017

US markets have reached new record highs. Hurray! Or, last hurray?? S&P 500 and Nasdaq have done exactly what I expected to happen per my recent posts: Ready for 2500 and Show Time. The S&P 500 is stalling just below 2500, and Nasdaq has climbed to 6400 but seems to encounter air pockets up there. A few weeks ago I said that kind of price action would be a sign of weakness. Let’s see how that looks like in the current chart:

^SP500 (Daily) 10_16_2015 - 7_31_2017

The same drawing I posted on July 11, with the S&P now moving nicely into the projected blue target circle. That’s not the product of some magical crystal ball I have, but merely linear interpolation of the recent trends. That obvious trend will stop eventually and the big question is when and where. My Earl indicator has turned down already, and the slower Earl2 has all but negated the recent rally. That’s what I warned for and this is a reason to be very cautious at this point. It looks weak but as long as no trend lines are broken things are holding up. How much longer? I don’t know. All we can do is watch and be ready.

The LT wave did a fair job in July and here is the wave for August:


Expected weakness until around the 20th proved much more short-lived. The S&P 500 bottomed on the first expected low near the 8th and then climbed steadily into the expected highs around the 26th. Intra-day peak came on the 27th, no perfection in this world…
For August the wave suggests weakness until around the 15th, followed by an unusually strong period until the 25th. The lowest LT wave value comes on the 10th and then goes to a very high LT wave reading on the 23rd. If the S&P gets through the weak period without technical damage then a major high may be seen on 23rd (+/- 1 day). If we get a significant drop first then 23rd is more likely to become a rebound high in an ongoing decline. That are the two major scenarios I would consider at this point. As always, please remember the LT wave is experimental and will not always work perfectly.

I also want to revisit my June post: Get ready for the August eclipse. As expected, news media and astrologers are getting very excited about this event, e.g. this Newsweek article: Basically, if anything serious happens to the US or its president in the next two years then astrologers will conveniently blame it on this eclipse and take it as proof that their methods work. Question: and when was the last time nothing significant happened over a two year period?
Don’t get blinded by this eclipse, I would rather keep an eye on the 1987 chart comparison I posted. The recent 6 weeks price action has continued to be exceptionally similar. Here is a more detailed comparison chart updated for July:


History doesn’t repeat, but sometimes it rhymes. As far as direct year to year comparisons go this is as good a rhyme as you will ever see. The rates of change differ, but the important highs and lows keep matching well. At some point the rhyming will stop, but we don’t know when. An S&P surge above 2500 in August, with breakout above the blue line, would make the historic comparison even more compelling. A similar October crash, taking into account the differing rates of change, would then target 2150 (= the 2015 highs).
I never have more than 60% confidence in any scenario, including this one. But I am keeping an eye on it.

Posted in Market Commentary | Tagged: , , , , | 2 Comments »

Washout time

Posted by Dan on August 24, 2015

We got the first failed lunar period of the year and the market promptly followed through on the downside. I have been warning for it. Last month I wrote:

…we keep waiting for the first lunar cycle miss of the year. When it comes it will give us an important read on the market, as it will probably indicate the direction of the next major trending move in the markets and a departure from the mostly sideways trading we have seen since the beginning of 2015.

So, what’s next? Here is the current Nasdaq chart (click image to enlarge it):


We remain in a lunar red period. Panic is engulfing the market with US futures indicating another 4-5% drop for stocks at the moment. And nothing suggests a bottom at hand in any of my indicators. My weekly and daily reversal levels are also bearish across the board.
The first thing to do now is wait and let the washout pass. A bottom may come today or tomorrow, but it could also take weeks or months. First indications that a bottom is in are likely to come from MoM indicator turning up, so that is what I would wait for. We may get several “false starts” before a proper rally gets going again. When markets are dropping fast it is better to buy too late than too early. Remember: this too will pass.
Also keep an eye on my reversal levels, which are posted on Twitter, Stocktwits and Scutify every day. In emotional market times an objective method is usually worth its weight in gold.

And if you are looking for something to blame, spare the Chinese or the Greeks. We can blame it on Saros cycle 125, something I warned for more than 2 years ago: The Saros cycle and the stock market. Saros cycle 125 has been bringing financial panics since the Tulip mania in Holland.


Posted in Financial Astrology, Market Commentary | Tagged: , , | 5 Comments »

The long term crash cycle

Posted by Dan on November 19, 2013

In a previous article I pointed out the possible existence of a 4666 day (= 666 weeks) and a 88.37 year cycle in the market. Of course, with only 200 years of observed stock market history we have little proof for it.
One reader asked whether there are even longer cycles we could possibly consider.

Yes, there are, but then we have even less data to confirm them. However, we can to some extent use data of famous financial panics and crises, which occurred already before we had official stock markets.
And long term climate cycles can also offer clues. I do not think that planets influence the stock market directly. But planetary cycles can and do influence climate and weather, and weather events can influence people’s mood and their spending patterns. So, planetary cycles can influence the economy (and by extension the stock market) indirectly, through the effects they have on the solar cycle and on long term climate.

For example, long term Nile records have provided evidence for a 88 year and a ~200 year cycle in the water levels. See: NASA Finds Sun-Climate Connection in Old Nile Records
A study of 9400 years of reconstructed solar data has also confirmed long term cycles of 88 years and 208 years. These are known as the Gleissberg and Suess cycles. See Abreu et al.:
So, it is not a big stretch to propose that these cycles may have economic effects, as it is clear that annual rainfall and temperatures influence a lot of different sectors.

Thus, besides 88 years we can also look for 208 year patterns. Interestingly, these periods do indeed show up quite frequently when we look at the most famous speculative bubbles and crashes.
One of the earliest recorded bubbles was the Mississippi Company and the South Sea Bubble, which peaked in 1720. Well, 1720 + 208 = 1928, which was of course near the peak of the 1920s speculative stock mania.
Another period of rampant speculation ended with the Panic of 1792. 208 years later we had the bubble, again rampant speculation, which ended in the year 2000.
Another interesting case was the Panic of 1796-97, which was a real estate bubble (land speculation), affecting Europe and the USA. Adding 208 years we find 2005, which was close to the top of the most recent real estate bubble.
Not only that, 1796 + 88 years = 1884, which leads us to the Panic of 1884, which was a banking crisis.
Similarly, the Panic of 1819, was followed by the Panic of 1907, again 88 years later.
The 1901 crash, points to 1989 if we add 88 years. Not a perfect match, but we had the crash of 1987 and the Nikkei crash in 1990.
Then there was the Depression of 1920-21, followed 88 years later by the Great recession of 2008-09.
So, what we see is that similar crises are often separated by these 88 year and 208 year periods.
Sometimes they also return to the same place after 88 years. In France the value of assignats (an early experiment with QE) crashed to near zero in 1794, and that got things really going in the French revolution. See in this chart (click for larger image):

(source: )

Exactly 88 years later the Paris stock market crashed in 1882.

Based on this crash cycle, we should thus watch out in 1929 + 88 = 2017 as the next year to bring us a major stock market mania and crash.

Where do these 88 year and 208 year cycles come from?

It are combined planetary cycles.
88.37 years is the triple Saturn cycle. It is also 8 solar cycles and 10 lunar precession cycles. The lunar precession cycle (8.85 years) is often overlooked, but actually quite important as it determines when we get spring tides and plays a role in weather and climate as well.
The 208 year cycle is equal to 19 solar cycles and 11 Metonic cycles. It is also 11.5 Saros cycles. It is 10.5 times the Jupiter-Saturn synodic period (19.8589 years), and 15 times the Jupiter-Uranus synodic period (13.8119 years).
Through a more complex interaction, a 208 year periodicity also emerges from the lunar cycle. See this article.

The 4666 day cycle, is a shorter term cycle that resonates closely with a bunch of planets.
Jupiter and Neptune are conjunct every 4668 days (heliocentric) or 12.8 years.
Venus and the Earth are conjunct every 1.59869 years. 4 * 1.59869 = 6.39476 years
Earth and Mars are conjunct every 2.13535 years. 3 * 2.13535 = 6.40606 years
Venus and Mars are conjunct every 0.914227 years. 7 * 0.914227 = 6.39959 years
The implication is that every 6.4 years the planets Venus, Earth and Mars come back to the same relative position in the sky. Every 12.8 years (~4666 days), the planets Venus, Earth, Mars, Jupiter and Neptune return to the same relative position in the sky.

If we combine the 88.37 year cycle with the 208 year cycle, then there is a resonance at 153.6 years.
153.6 years = 12 * 12.8 years (4666 days).
153.6 years = 14 * 10.97 years (= 14 solar cycles).

Now it all fits together.


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Posted in Financial Astrology, Market Commentary | Tagged: , , , | 9 Comments »

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