Tom Houggard makes the bold call of an imminent market turn
Time cycles: Awesome timing tool
In early January 2004, I went on Bloomberg TV in London and told the viewers that my timing analysis predicted a high for the Dow Jones index on the 13th February 2004.As the day approached I got many emails and calls from clients and journalists to ask if I was still sure that the Dow would turn. All I could do was to say that nothing had changed in my calculations.
The day came, a Friday, and the Dow dropped 130 points that day. I left work thinking “job done”. On the Monday the Dow rallied and regained all that it has lost on the Friday. Yet again I had phone calls from clients and from journalists. The clients were anxious. The journalists were smelling blood. They could make a big splash out of the “guru” getting it wrong.5 weeks later the Dow traded 700 points lower. 8 months later the Dow was 1000 points lower. It took 212 trading days before the Dow closed above the high which was forecasted on TV.
In the early part of a time cycle change you don’t always get an immediate reaction. Sometimes you do, but frequently the change is subtle, like the change in sunsets. After solstice we don’t notice the days becoming a little shorter every day. I once read a quote from a great cycle guru Michael Jenkins: “90% of the change comes in the last 10% of the cycle”. The quote captures the perception of time cycles well. We don’t notice the cycle has turned until much later. It takes a 20% turn from a peak before we call it a bear market. By then the cycle has already been at play for a long time. Of course. there are times when the cycle turns on a dime.
Take for example the case of the forecast I made in 2011. A friend of mine, Nick McDonald from New Zealand, was compelled to put together a month-long webinar event in aid of Red Cross relief efforts in his hometown Christchurch after the devastating earthquake. I was asked to give an hour long presentation on how I calculated the major turns in stock indices. I have never made a secret of how I do it. Although I teach it more formally in my seminars, almost anyone can pick up the essence in my cycle work, purely by looking at one of my charts. On this occasion I explained to the audience during the webinar, which took place during May 2011, that a major turn would occur in the Dow Jones Index on the 19th July 2011.
I stated to the audience that “if the Dow is rallying in the days and week before the 19th, then I would short it but, if it was falling, in the days and weeks before the 19th I would go long.” The Dow rallied and I went short on the day. The day after the Dow rallied about 200 points. I suspect there were a few angry traders around the globe cursing me. The following days told a different story though. The Dow fell from 12700 to 10600 in the next 13 trading days. It is not an everyday occurrence to clock up 2100 Dow points in 13 days.
As I said earlier, sometimes the time cycles produce very violent instantaneous reactions, and sometimes the moves come slowly and gradually. I obviously didn’t write this article just to go over old material. I have forecasted the 8th April to be a major turn in the Dow Jones index. I have been telling audiences all over the world for the last 2 months. Now I better clarify a thing or two about my much publicized turn-date:
1. The 8th of April is the turn week rather than the turn-date. The reality is that the high in the Dow could happen 3 days before or after the 8th April. Maybe the high is already made. Maybe we will bounce this week from the losses after the Non-Farm Payroll last week.
2. I don’t know if the turn is a slow turn or a fast turn. Some turn days produce violent reactions, while others are slow.
3. Is this the end of the bull market? I have my doubts, but as I am using the method for swing trading rather than my pension, I don’t have to make those considerations.
4. What do the experts say? Well, I have seen a very famous cycle analysis say that this is it for the bull market, and I have just read a piece by a world-famous Elliott Wave Analyst that this is just the beginning of the new bull market.
If they can disagree to such an extent, then my “guess” is simply that. The fact that the Dax made lower lows while the Dow made new highs recently tells me that there is underlying weakness in the market. I remain short DAX from 7950 but I am not short Dow yet. I am also long Euro Dollar on a speculative call.
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