The following recent quote from Morgan Stanley’s Mike Wilson is warning we are very close to the start of a big drop in equities.
“…if equity markets fail one more time at our key resistance point, we believe the reversal is likely to be sharper and deeper than one might expect, even if the earnings recession is more benign than we expect.” (Source: zerohedge.com)
Investment giants like Morgan Stanley have access to the best historical patterns and analysis, so they must be seeing some alarming patterns to make a public warning like that. Their forecast confirms what many other respected cycles analysts are showing, a major low in equity markets in the second half of this year, ranging from an 11-12% drop in August-September to a 50% drop into late November.
Mike Wilson is referring to the pattern forming now, called a triple-top reversal, which is where the price tries several times to break through resistance but fails. The third failure completes a W-shape and marks the start of a sharp reversal. The resistance is formed by a long-term trend line connecting the top on January 26, 2018 with the top on September 21, 2018. SPX touched this trend line again a few days ago, July 26, when it topped at 3028.
On June 18, Z3 News Contributor Phanuel shared that God had shown him SPX at 3035. This target has not yet been reached, but he was not shown any dates. It’s currently very close at 3015. The trend line is sloping upwards so it’s getting a little higher each day and will reach 3035 on Friday August 9, which is my current estimate of where the turn is. However, during my prayer time on July 12, I saw a green 25 and a green 55. I believe the green 25 was fulfilled in intraday trading on July 18 when the markets reversed hard, moving up exactly 25 points after starting the day with a drop, so I am now watching for the green 55. In the past, my red and green numbers have been fulfilled in intraday trading, but since 55 is so big, it might take a few days to do it. If 3035 is the top, that would mean SPX would first need to drop down to about 2980 before making a steep move up to about 3035, but the top might be a little higher than 3035 since prophetic price targets usually show direction and rarely mark exact turning points.
The historical pattern for market crashes shows they reach the bottom very close to the Jewish holy days of Rosh Hashanah and Yom Kippur. This year, Rosh Hashanah begins at sunset on Sunday, September 29 and ends at sunset on Tuesday, October 1. Yom Kippur begins at sunset on Tuesday, October 8 and ends at sunset on Wednesday, October 9.
The historical pattern also shows the top is 40 to 45 trading days prior to the bottom, so if the top is August 9, adding 45 trading days puts the bottom on Friday, October 11. However, historical patterns also show the first drop is about 9-13% followed by a big bounce back to within 3-4% of the top, so if the top is 3035 and the pattern is repeated, SPX would make the first bottom at roughly 2640 to 2761. The June 3 bottom, which was 2728, is within that range and previous bottoms often mark support levels, so it might find support around there. If the historical pattern is repeated, it would then form a secondary top at around 2913 to 2944. From there, the drop to the next bottom often happens within 10 to 15 trading days.
In addition, the drums of war are beating loudly with U.S. military forces moving into position for a potential conflict with Iran. If that happens, equities would likely make a lower low while oil and precious metals move sharply higher. I believe this is a very real possibility.
Author: James Bailey
James Bailey is a blogger, business owner, husband and father of two grown children. In 1982, he surrendered his life to the Lord Jesus Christ. In 2012, he founded Z3news.com to broadcast the message of salvation by reporting end time news before it happens.
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