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In this showcase we'll take a look at the recent sharp drop in MSFT, as well as revisit a very reliable, yet overlooked astro tool.
First, take a look at the chart:
The drop that we're going to look at is the one that happened shortly after point "D" on the chart above. There are four indicators on this chart. Three of them are very familiar to Wave59 traders, and the other to only a few. First, let's go over the standard tools.
The red line at the top of the chart is the Fractal Trend Index. It is a trend indicator that is extremely adept at locating times when the force behind a particular move leaves the market. This is shown by a sharp run-up and peak in the indicator. There are three such peaks marked on the chart above by red arrows. These are the times when we should be on the lookout for a reversal in trend. The first peak on the chart was a little early, but coincided with a major reversal in trend from down to up. This was not the absolute low, but is was within half a point of it. The next arrow occurred in July, marking an intermediate top and quick retracement. The third arrow occurred at point D, and is the one that helped set the stage for the big drop two weeks ago.
The next indicator to turn your attention to is the 9-5 Count. This is shown on the chart by blue/red 9's and gold 5's. Note the gold 5 at the low in B and how the bottom was tagged to the day. It took the market 7 months to make another gold 5, and this happened at "D" - again to the day. In between, the 9's caught the small stuff. This chart pretty much speaks for itself. Blue 9's are buy indications and red 9's are sell indications.
The third indicator is the pink line at the bottom. This is an 18 period UltraSmooth momentum curve. The default period of 12 is usually a little too choppy for daily charts, so I always like to increase it to smooth things out a bit. There are three divergence signals marked on the chart with red trendlines. The first is at the low at "B", the second is in July (complimenting the Fractal Trend Index top there), and the third is at point "D". So divergence signals are 3 for 3 this year in MSFT.
These tools are familiar to any serious student of Wave59, and have been covered extensively in previous showcases. What might not be so familiar are the colored fan lines projecting from the highs and lows on the price chart. These are Planetary Speed Lines, and represent the heliocentric (sun-centered) motion of particular planetary bodies, directly linked to significant highs and lows in MSFT.
The line coming off point "A" is Neptune. The lines coming off point "B" are Mars (steepest), Jupiter, Saturn, Uranus, and Neptune (flattest). The lines coming off point "C" are Uranus and Neptune. Fast moving planets like Mercury and Venus are ignored as the lines are too steep given our scale of 1 degree = 1 point.
The area I'd like to point out is "D", the top, where price hit the Saturn line from "B" and the Neptune line from "A". These lines work just like standard Gann Angles, so price doesn't like to break them. They perform just as well as the static Gann Angles, and are much more meaningful because they represent an actual physical thing, as opposed to a random line that was drawn "just because it looked good".
If we take stock and check out what was going on at point "D", we'll see that we've got a huge flag that this is a significant top. Specifically, a gold 5, momentum divergence, Fractal Trend peak, and Planetary Speed Line cluster. And if that wasn't enough to sell, the combination of the red 9 and light blue Uranus line in October should have been.
I haven't shown all the Speed Lines on the chart because it was a little cluttered, but I'd definitely recommend taking a Planetary Fan (set to 360 points = 360 degrees) and moving it from high to low. You'll be surprised at how many turns those Speed Lines caught. Astrology is a very downtrodden art, but the tools are there in Wave59 if you would like to experiment. Most traders are reluctant to do so, but they are missing out on a very valuable and accurate branch of technical analysis.
Thanks for reading! Happy trading, and stay tuned...