Dave's Set Up Examples
Trade Setup Number 5
 

The recent market volatility has been a result of a financial crisis according to most commentators. I have always believed that it pays to study the prior instances when a similar crisis occurred. In the Chart below, I show a picture of the crisis in 1998 which led to a 22% plus decline from mid-July to early October. I believe that market action is created by the mass human behavior, and although history may not repeat exactly, it will probably rhyme.   

 

Chart 1

 

As you can see above, I have shown the daily action with weekly boxes so that we can see the action of the key weekly swing chart. The first low occurred on the fourth week down from the high, down over 11% from that high. In the current case we declined just over 12% intraday from the July high. The market then rallied just over 2 weeks before turning lower. In my course, I designate the second higher weekly high as a -1 plus 2 week because the weekly 3 bar chart turned down on the third lower weekly low from the high.  Price then plunged to a low in September where it lost over 15% in only 4 trading days. Now that is volatility! The low on 9/01/98 was down 7 squares of 90 degrees on the Master Square. These angles were started from the low on the Decade Chart which was 62.28 in 1974.  Price then rallied again for just over two weeks which was a second -1 plus 2 week on the weekly 3 bar chart. The stage was now set for the final plunge to new lows on October 8th where the intraday low reached 923.32 down 22.4% from the July high. It is important to note that the price declined 720 degrees or 8X90 from the high. In my course I showed how that key low in 1974 has setup a vibration where highs and lows all the way back to 1962 were frequently on angles from that low. Since it worked in the past, I.E. 1974 back to 1962, we can assume it will work in the future which it has done right up until today. In Chart two below I show the current position of the S&P, where the Master Square has nailed the price action once again. It is important to note that the price decline WAS NOT over after the first plunge down. It took over 80 calendar days from the July 1998 high to the final low in October. The vertical lines show a separation of 22.5 calendar days from the July high. This leads to a conclusion that the next two and a half months could be a rough ride.

  

Chart 2

 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

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