Is this what is finally going to blow up the stock market futures magazine natural electricity examples

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Are you sad to see April go? I’m not because April showers usually lead to May flowers. Am I in the Twilight Zone or did I actually see the two leaders of the Koreas hug this week? That’s incredible. If you think about it, how many times have I come here in the past year warning about some geopolitical problem on the peninsula that could blow up the stock market?

I guess it’s going to have to be something else that does the job. If they do sign a peace treaty it would be just about the biggest May flower in history. Since we learned from Prechter’s Socionomics, peace talks and their fruition among formerly deadly enemies is more indicative of a stock market top than a bottom. Because we are talking about a ceasefire in the 1950s, this is a big one. Aside from the Berlin Wall coming down, one could argue this is the biggest peace development since WWII. For our work, you shouldn’t be fooled into thinking an event like this is a major buy signal. Let’s say this does happen in May, you will hear from the business media it will be a measure of prosperity and one should celebrate by buying stocks.

That could happen in the short term but those of us who’ve been around the block a few times, we know the drill. Buying the rumor and selling the news is standard operating procedure. If there is a rally through the peace process it wouldn’t necessarily have to end the day or week the treaty is signed. All I’m saying is when we have a VIX this low for so long, its indicative of complacency and euphoria. If we have a historic low in the VIX (6 months ago) which led to a historic peace treaty would it be fair to say the markets are also working on a historic high?

Sorry to pop your bubble, but how did we get to a morning where the market is a flashing a continuation of last Wednesday’s low? Last week Amazon released earnings of $3.27 actual for the quarter as opposed to the $1.26 estimated. As you know, I don’t have much use for the fundamentals as people who trade according to patterns are generally more interested in the reaction to any set of numbers as opposed to the actual numbers. That being said, is it just me or do you find it odd there could be such a disparity in what the analysts were looking for as opposed to the actual number? Then when you look at the pattern there is a massive bearish belt for the day. It has the look of somebody trying to find a buyer for a lot of people who wanted favorable conditions for selling. As of this writing, they are still protecting the gap up, but I do have a calculation for the high at least in the near term. I’d have to dig into the longer-term cycles to see if there is anything ‘more’ there.

Technically, this can best be described as a trading range because I have decent square out vibrations at many recent highs going back to the middle of April and again last Wednesday on the low. The market no longer has the cyclical wind at its back from the calendar and we’ve seen the market peak in May as recent as 2015 and prior to that in 2011. That means the two important corrections of this decade both started in May. Granted, neither one of them came close to the scale of 2008 but they did some damage. Come to think of it, neither had anything like a historic peace deal either. But Osama Bin Laden was reported to have been killed on May 2, 2011.

Remember the euphoria we saw on CNN? They were celebrating in Washington and Time Square like it was 1999. The business media told us the market would surge for certain. Crude oil topped unexpectedly that week with a major London hedge fund losing $400 million in only four days although I did report it was a perfect Fibonacci/Gann square of 9 storm at the high. In fact, the Osama Bin Laden sequence is the highest level for oil in this decade. In terms of psychology, it materialized on what everyone considered was a "very good news" event.

By the way, did you notice some of the big defense contractor stocks got slammed last week? Here’s one chart, LMT which has interesting readings with an original top at 363, a secondary at 361.99 which is a 36.20 move up which is also a 97% retracement (very close to .99). What does that tell me? Somebody is taking these peace talks very seriously and appears to be a bear market for war hawks.