Technical Analysis Reveals Blow-Off Top Coming Soon

Technical analysis reveals the stock market could soon be forming a blow-off top, which is a common pattern preceding a big move down.

Yesterday, a Z3er named Roger shared his findings from Peter Temple’s World Cycles Institute, which combines the study of historical cycles with Elliot wave analysis to forecast price movements. Roger also formerly worked as an investment analyst for a private equity firm.

Roger explained the market pattern since August 2015, which we have identified as a triple-top reversal (W-shape), indicates we should see one final move up before making the first major leg down. He explained it as follows:

“All bull markets tend to top in one of two ways. Either they hit a new high on extremely high volume with no price movement or they run up really fast toward a new on lower volume and then reverse quickly (blow-off top). Looking at the technical analysis for this market it appears to be a head and shoulders pattern and likely setting up a “blow-off top”. I would expect a final run up toward a new market high (probably 2116 on the S&P) and a quick reversal starting the sell off cycle.”

“The entire pattern beginning last August is a large “Head and Shoulders” market top pattern (your big W). Sometimes individual stocks and markets can breakout to to the upside from a W pattern but this one doesn’t appear to be formed correctly for a breakout to the upside.”

“What happens right before the blow-off top is an initial big move down. This gets the shorts wrong sided then an even bigger and quicker move up. The shorts panic and sell then the longs jump in thinking the market is getting ready to break out. This adds rocket fuel to the up move but then it collapses like an explosion at the top. Everyone in the investment community knows what that means and can see the pattern. There is typically about a 62% retrace from the first big wave down on a blow off top. The top of the 62% retrace is the textbook 2nd short entry point and should be followed by another big leg down.”

Amazingly, Roger’s projections confirm several prophetic revelations.  The blow-off top is the technical term for the graph I saw in a vision and shared in a post on March 27. At the time, I had never heard this term, but the pattern is the same steep climb followed by a steep drop followed by a 62% retrace. In my post I estimated the bounce would recover 50% to 75% of the drop, so 62% fits in that range.

Another confirmation is Peter Temple’s estimate the blow-off top will peak at 2116 S&P (18,197 Dow), which is the same number I saw on Friday April 22, which I shared in several previous comments. I was not shown any dates or other details, but I assumed it was S&P because it looks too low to be Dow points. Based on that, I began to reluctantly look for a new top coming soon while hoping for another interpretation.

On May 2, I saw a red 599. Then a couple of minutes later I saw a red 152. The numbers were displayed within a table like what we would expect to see for displaying changes in the market. I understood these were Dow points, but was not shown any dates. Based on Roger’s projections, it appears those numbers would come after the blow-off top.

Roger’s comment about an explosion at the top confirms a dream shared by Jim Reeve in a comment posted on May 7:

“There were some other metaphorical clues in the swimming dream that suggests it was about my options intention (for example, options are cigarettes, because they burn and aren’t healthy for you). What is really interesting is about the explosion at the end (actually, a barrel of cigarette butts exploded).

I was surprised with the explosion. So, I have difficulty believing it is a picture of my potential options “exploding”, as in “expiring”, because that wouldn’t be a surprise in a week’s time. I think it means at the last moment they might “explode”, as in go up. The cigarette butts (nearly expired options) explode in price?? That would be a surprise. So, it hints that there could be a more precise option trade as we get nearer the end of this week.”

As Roger explained above, if the historical pattern is followed, the blow-off top will be preceded by a big move down. The chart below shows his projection with the upward movement from yesterday (May 10) running out of gas very soon, perhaps reaching as high as 2095 S&P (18,017 Dow), as shown with the blue line at point C.

So after reaching 2095 S&P, Roger is expecting to see a drop down to 2045 S&P (17,587 Dow), which is shown as Point E in the above chart. He explains:

“It looks like we are getting close to the top of this current leg up. After the S&P hits 2095 the next leg down should bottom at S&P 2045 before the final leg up to the blow off top. Following that is the blow off top run up from 2045 to about 2116. Blow off tops run up very quickly with large upward price movement. Typically, the blow off and reversal happen in the morning and then spend the rest of the day selling down. The day after the blow off top will be a big down day as indicated on James’ graph. Looking at the timing I’m not sure if we could complete the blow off top by this Friday. It would be my guess that the final run up to S&P 2116 and blow off top happens on Tuesday the 17th.”

The projected drop to 2045 (17,587 Dow) is not far from the current trend line, as shown below in the one-hour chart.

Roger’s projected big move down prior to the blow-off top also confirms another prophetic dream shared by Jim Reeve in which he saw a bearish move down (symbolized by a wet horse) preceding a strong move up (symbolized by a horse on the loose). He shared the following dream in a comment posted on May 8.

“I had a dream last night where I’m at a giant washing machine. I need to get the machine going so I need to push a button. This button recedes deeply, but acts like there’s a spring resistance. I’m wondering if I’m pressing hard enough, because I feel the spring tension as I push (really sounds like VIX doesn’t it?). I did push it enough, because the machine works. It turns out that after the wash cycle, out comes a wet horse. So, we washed a horse. All that water and wetness is a short market, and I think the button is the VIX being pushed up against a spring tension (which really captures the VIX’s mean reverting characteristics). It’s important to see that it’s a horse, because once it’s been washed, it’s released. A horse is definitely bullish, but it’s washed first (bearish).”

Conclusion:

The first step in the eight-step process followed in previous market crashes is to identify the final top because that is ground-zero for the countdown to the bottom. So far, the high was reached on April 20 at 2,111.05 S&P (18,167.63 Dow).

If we reach the projected 2116 S&P within the next week or so, we would have a new top, which means the countdown would reset. If we repeat the historical pattern, we would then start testing support levels with increased volatility during the remainder of May and June. Panic selling would most likely begin in July with the first bottom in mid-July.

A move up to 2116 would be painful for anyone holding inverse ETF’s, but the good news is blow-off tops don’t typically last very long. On the other hand, the volatility also presents great opportunities.

I hope the prophetic confirmations shared in this post will encourage everyone to believe God is helping us, despite some mistakes along the way in my interpretation of prophetic clues. I believe God uses these partial and often misunderstood clues as part of His sifting process to separate those who are trusting Him from those who are relying on their own understanding. The Apostle Paul recognized this danger and warned us not to despise prophetic ministry.

19 Do not quench the Spirit.
20 Do not despise the words of prophets,
21 but test everything; hold fast to what is good
(1 Thessalonians 5:19-21)

As always, these historical patterns, prophetic insights and market projections are not recommendations for investing, but are shared only as a starting point for each of us to seek God regarding what to do with it.

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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