This year the fall equinox fell on this past Tuesday, September 22nd at 9:30 AM EDT. Many experienced traders have noted that markets tend to reverse direction on or about solstices and equinoxes. Sometimes these points on the solar calendar define a major market high or low (i.e. March 24, 2020 panic low), and sometimes the change in trend (CIT) lasts just a few days. This past Monday equity markets gapped lower (Coronavirus news etc.) and volatility spiked. Much of the damage in many stocks was alleviated due to a late-day rally. As mentioned, the news flow was negative, but in the end, it is not the news that is important, it is how the market and individual stocks trade in relation to the news. The question is, was Monday indicative of one of these equinox reversals that stick? Only time will tell. Certain bull market leaders which have been in a correction since the beginning of September such as Apple (AAPL), DocuSign (DOCU), and PayPal (PYPL) appear to be reasserting to the upside. Keep an eye on the leadership stocks. Outside of the political uncertainty that we have discussed in a prior note, a few autumn bear markets have culminated in panics such as in 1929 and 1987. The famous WD Gann noted that there is a time period to watch out for a potential panic, which is 49 to 55 calendar days off the highs of the market. If we assume that September 2nd is the high for the market in general, then 49 to 55 days out from that lands us in the period of October 21 to 27. Mark that on your calendar. It is right before the US presidential election. In addition, every year around this time, we re-read the white paper written by Christopher Carolan, Autumn Panics: A Calendar Phenomena. In the paper, Mr. Carolan compared panics that occurred during the fall season dating back to the 1800s, but with a twist. Instead of using the solar calendar for comparison and timing, he used the lunar calendar starting from the first new moon after the spring equinox and counting out. For his work on that paper, he was honored with the 1998 Charles H. Dow award by the CMT Association.
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