How Hidden Geometry found the Stock Market Top Again

Using Little Known Rules for Andrews Pitchfork

 

By Ron Jaenisch

 

When I sat down with Alan Andrews at his kitchen table and he explained his methods, drawing the pitchfork was not the only important part of the lessons. He stressed a variety of concepts and rules, most of which are not covered in his original 60 page course. The important concepts and rules were hidden in charts in his weekly news letters in the 1960’s and 1970. It was in the weekly newsletters that he published charts and explanations he used to trade. In this article I will show you some of them. In an effort to make it more interesting I will examine a period of time in the stock market and how his rules were actually applied.

In the beginning of September the stock market was strong. On Friday Sept 14 the Dow Jones Industrial Index had made the eighth day of higher highs. That week SPY made a new all-time intraday high and most investors were cheering that their 401K was doing great.

On September 13, I sent out an email to the Advanced Andrews group with the subject line Dow and the simple comment “down she goes”. The next day YM futures made a new high over night and I stayed with the short position that was initiated September 13.  The outlook from my point of view was very bearish in spite of the bulls enjoying higher highs during the premarket hours. Professor Alan Andrews, at his kitchen table, taught me how to have the faith necessary to stay short and later add additional short positions. This is accomplished letting the market show you the evidence, in the form of hidden geometry, of what is going on and what will occur next.

A request came in from a you tube viewer for an update on my view of the stock market crash of 2019. I responded that this will be covered in detail on Saturday morning at a monthly live seminar in Rancho Bernardo.  

During the seminar the audience was reminded of various patterns that Professor Alan Andrews suggested were useful for finding major pivots and that they were present at this point in time in the Dow. One of the patterns was the expanded pivot formation or EP. This is when pivot four is lower than pivot two and pivot five is higher than pivot one and three.

The EP is sometimes referred to as the Gartley Reverse Point Wave. It is different from the SEP which has a pivot four that is higher than pivot two. The SEP is a pattern that appears ordinary to the naked eye but has other properties that are rarely seen.

When most traders look for the EP pattern they look for it to be a congestion pattern that leads to price continuation. They often look like this.

 

https://bullwaves.org/wp-content/uploads/2017/02/expanding-triangle-correction.jpg

 

At the high in 2007 in the S&P there was an EP pattern on the weekly charts, which enabled traders that utilize hidden geometry to know a probable top was being made. Recently this top was utilized to help find the recent high in SPY and DIA, price stopped at a Babson line, on the weekly charts.

 

 

There was an EP pattern in SPY in the 2007 high and the 2019 high. In addition there was an EP signal that appeared on the weekly charts about half way up between the low in 2008 and the high in 2019.

With the daily SPY charts are three daily EP buy signals that were noted after the 2008 low. These signals gave traders the indicator they needed to know the down trend was over and the rally was continuing.

On that Saturday morning, at the group discussion, after pointing out the EP patterns on the weekly highs of the Nasdaq, Dow and S&P the pattern in the last week in YM futures was discussed.

 

YM is the Dow Jones futures contract. It was pointed out that the move up had a break of the MLH which is the line parallel to the Median Line. Professor Andrews told me privately that this is typically a warning that price will be lower than the break point eventually.

In addition the up move during September was an SEP pattern. This pattern was known to occur prior to a major price reversal. When a major price reversal takes place then a down move is in progress.

Andrews Hidden Geometry has various rules and tools.

After the fed decision on Sept 18 price tried but did not make it down to the upsloping ML.

This means that if price goes up a bit the next day or so and then drops, an Andrews shake out pattern would be the next signal that would give another strong indication that a down move is in progress.

As price went up the next day, it was time to draw the Action Reaction lines to find where the high was likely to be and additional short positions can be placed. At about the same time SPY made new all time highs, just like they made the week prior. And just like the prior week the spy futures did not make new highs. This type of divergence gets the attention of the old time traders.

The hourly chart was used and additional positions were put on with a risk of under $300 per contract at the reaction line.

Now all that was needed is for price to break down and head to the target far below the values on the hourly chart.

A few days later I see the chart above …. the Dow Jones futures chart that I am watching.

At this point things are starting to move and I am wondering what will happen next. As I look at the Dollar index I have my answer, and act.

 

Currencies like to go in strong trends according to Leo the surfer over at www.stablecoin.tech He looks for strong trends in currencies, that last for weeks, using a method derived from the Royals of Europe. His next trend is the US $. If he is wrong on this call the risk is a few hundred dollars.

Over the last year the stock market has gone up due largely to the strong dollar. Foreign investors have invested in U.S. stocks as a way to profit from holding the dollar. As the value of their holdings go down so will the dollar.  Today is Sept 23 and by the time you read this article, you will see what happens next.

How far will the stock market go down?

 

 

 

Last Christmas I used the above chart lines to find the bottom and announced it at the monthly seminar at the Remington club. It’s the same way that the bottom during 2008 was found.  Perhaps I can do this again at a later point in time.