Analog Watch: Feb 6, 2018

I love analogs.  Sometimes called fractals, they can provide an excellent road map for future price moves based on past ones [for details and a general explanation, CLICK HERE.]

The first one I ever discovered was the best I’ve ever seen — a repeat of the 2007 top in 2011.  It forecast the summer of 2011 drop to the day and the dollar with very few head fakes along the way.

My favorite analogs forecast big drops and provide an opportunity to score big gains by shorting or simply avoid big losses by hedging.  But, I’m not picky.  I’m a big fan of any opportunity to figure out where the market is going before it gets there.

Of course, I always post these with a little trepidation.  Even though almost all of them have worked out, there have been a few notable exceptions over the past 7 years.  Even those have value, though, as the failure for a move to takes place usually confirms the likelihood of the opposite move — also useful.

The drop since Jan 26 offers an intriguing possibility to repeat a previous pattern which, if it plays out, could produce a nice 15-20 gain over the next couple of months.  More importantly, it could keep us on the right side of the ledger in the midst of heavy volatility.

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