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Santa Claus Cliff

By: Gordon Long | Friday, December 21, 2012

Ho, Ho, Ho ... Oh SH#&T!

The chart to the right shows the average annual percentage return during election years. This chart has been a surprisingly accurate guide since spring, but this about to change!


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Looking forward at the average post election year cycle, as shown on the chart below, it gives us a better view of what typically occurs in the weeks leading up to and after the January inauguration. Additionally, the analogy shows how 2013 might possibly unfold.

We have labeled an ellipse "A" on the post election analogy which maps to our analytic work which follows and uses Elliptical Fibonacci patterns.

We can see that the lift from the beginning of November seems to be fitting well in to an ellipse. This is suggesting that we will continue to see an overall lift in to the beginning of 2013. While an increase in volatility will be evident with the Fiscal Cliff drama. It likely won't be until the end of February until we see the and start down the back side of our ellipse.

After the March quadruple could possibility see another lift, back to the top of the larger ellipse pattern shown on our big picture ellipse chart.


The Next 3 Months


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The Big Picture

The chart below shows us the S&P from the market low in 2009. The recent lift appears to be fitting nicely in to a larger ellipse pattern, which is almost always the case when the ellipse has been identified properly.

It's important to note, if the analogy continues to hold we have a some bleak years ahead. The market is reaching the apex of the ellipse and will take a couple of years to move over to the right hand side. Moves across the top of an ellipse are usually violent with increasing volatility.

Throughout this period there will be increasing panic and every down will elicit calls from the "main stream" that we are having a "crash", "the top is in" and "it's time to stand aside". Then, as soon as it appears like it the ultimate crash is inevitable, the market will lift back to the top of the ellipse. It appears as if we may see this go on until then end of 2015 as on-going monetary money printing, fiscal "Kick the Can Down the Road" polices and "knee jerk" public policy keeps hope alive.


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Eventually, all this will end badly. The charts are clear about what lies ahead based on our current path


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Is there any precedent for the Ellipse Pattern?

Ellipses and the attendant Fibonacci Spirals can be found everywhere within the markets, and we have seen similar structures during similar months in previous years. This month's Triggers edition lays this out.

 


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Author: Gordon Long

Gordon T. Long
Publisher - LONGWave

Gordon T. Long

Gordon T. Long has been publically offering his financial and economic writing since 2010, following a career internationally in technology, senior management & investment finance. He brings a unique perspective to macroeconomic analysis because of his broad background, which is not typically found or available to the public.

Mr. Long was a senior group executive with IBM and Motorola for over 20 years. Earlier in his career he was involved in Sales, Marketing & Service of computing and network communications solutions across an extensive array of industries. He subsequently held senior positions, which included: VP & General Manager, Four Phase (Canada); Vice President Operations, Motorola (MISL - Canada); Vice President Engineering & Officer, Motorola (Codex - USA).

After a career with Fortune 500 corporations, he became a senior officer of Cambex, a highly successful high tech start-up and public company (Nasdaq: CBEX), where he spearheaded global expansion as Executive VP & General Manager.

In 1995, he founded the LCM Groupe in Paris, France to specialize in the rapidly emerging Internet Venture Capital and Private Equity industry. A focus in the technology research field of Chaos Theory and Mandelbrot Generators lead in the early 2000's to the development of advanced Technical Analysis and Market Analytics platforms. The LCM Groupe is a recognized source for the most advanced technical analysis techniques employed in market trading pattern recognition.

Mr. Long presently resides in Boston, Massachusetts, continuing the expansion of the LCM Groupe's International Private Equity opportunities in addition to their core financial market trading platforms expertise. GordonTLong.com is a wholly owned operating unit of the LCM Groupe.

Gordon T. Long is a graduate Engineer, University of Waterloo (Canada) in Thermodynamics-Fluid Mechanics (Aerodynamics). On graduation from an intensive 5 year specialized Co-operative Engineering program he pursued graduate business studies at the prestigious Ivy Business School, University of Western Ontario (Canada) on a Northern & Central Gas Corporation Scholarship. He was subsequently selected to attend advanced one year training with the IBM Corporation in New York prior to starting his career with IBM.

Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

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