Tomorrow we expect to see a big turn in US and European stocks. The method we use to calculate these turns (from existing market price cycles) is different from those used by others. Instead of using the usual ‘Fourier series’ analysis, dating from 1800 that supposes that cycles are quite rigid, we use a newer mathematics that allows cycles to be rhythmic without being fixed (see the video on our website www.hedcapital.com for more detail). This gives us great accuracy in timing but at the expense of uncertainty about direction. This is why we publish turn dates in advance – so that we can all observe the trend into the turn and so reduce this uncertainty. Uptrends lead to lows and downtrends obviously lead to highs, otherwise this method for predicting turns would be pretty useless, so we wait until the day arrives to see what the market does until then.
The current trend in stock indices in both Europe and the US is down. This is just the recent trend of course but this is the question that matters when judging a turn – what is the immediate prior trend? This current downtrend argues that we will see a low point at the turn tomorrow and we would advise covering existing shorts on any new low (for this current dip) that occurs during the trading session.
We may also then advise buying some equities to go long, although we always prefer to see an extension combined with a turn before recommending a trade. This confirmatory extension may not happen at all and we may also have to wait through tomorrow until the next day to see any such signal, as they are generated at end-of-day.
There is another big equity turn coming up on Thursday 13th June, which is the fourth (and last) of these tightly-spaced turns that we have been experiencing since mid/late May. This close occurrence of so many large turns always means increased volatility, as warned, so things should get a bit calmer in about ten days’ time. Until then expect more quite violent movement and trade accordingly.
Lastly, don’t forget that although turns are often accurate to the day, they can be a day late or early.