David Hockney is highly regarded in the art world for his innovative approach to painting, printmaking, and photography, which has consistently pushed the boundaries of traditional art forms.
Known for his vibrant depictions of California swimming pools, portraits, and landscapes, Hockney’s work captures the essence of contemporary life with a distinctive use of color and perspective.
His pioneering use of technology, from early experiments with Polaroid photography to creating digital paintings on iPads, has kept him at the forefront of modern art. Hockney’s ability to blend personal narrative with universal themes of nature, space, and human interaction has earned him a lasting legacy as one of the most influential artists of the twentieth and twenty-first centuries.
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“There is nothing new under the sun.” Ecclesiastes 1:9
“What happens today has happened before and will happen again.” Livermore
“Rather than love, money, fame, give me truth.” Henry David Thoreau
“Excesses in one direction will lead to an opposite excess in the other direction.” Robert Farrell
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Tracking Account Valuation January 4, 2022 – $1,206,085
Tracking Account Valuation June 11, 2024- $2,305,253 +91%
Intermediate-Term: ~ Downtrend
LOLR Trend: ~ Downtrend
Positions: 20% VXX, 15% SQQQ, 15% SPXU, 40% Cash
Hard stops: VIX 9.93, SQQQ 7.03, SPXU 25.45
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4:00: INTRDY Stoch: O/B Falling Bearish
Daily LOLR STS
5/2-DT 1/6-UT 3/4-DT
Breadth: -764/-1295
ADR: 0.57, SPY: -3.67 Bearish ST
NYMO: +3 Falling Intraday
NAMO: +5 Falling Intraday
The Summation Index is Rising
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As we’ve discussed in previous articles, understanding the fundamental principles that govern physics and human behavior can provide unique insights into the complexities of the stock market; from that understanding, SevenSentinels.com has developed some critical proprietary tools.
When I began my college career, my love for mathematics and logic made me think I wanted to be an engineer. Thanks to my high math scores on college entrance exams, I was placed in honors physics and trigonometry. However, despite the challenging content, I found these subjects too “dry” and “lifeless” to captivate me as a lifelong pursuit. My genuine interest lay in understanding human behavior, not in the mechanics of rockets.
I switched my major to psychology and later earned a double degree in psychology and economics. Despite the shift, those early lessons in mass, energy, and momentum have been invaluable in analyzing market dynamics and trend reversals.
Momentum, a core concept in physics, is a vector quantity with both magnitude and direction, making it perfect for studying stock market movements. Consider an object thrown upward: initially, it has positive upward momentum. As it rises, gravity exerts a downward force, slowing its ascent.
The object’s momentum decreases as its upward velocity slows. When its upward momentum hits zero, the object reaches its peak height and stops moving upward—the “apex” or “peak” of its trajectory. Once the momentum turns negative, the object falls back under gravity’s influence, accelerating until it hits the ground or encounters another force.
By measuring the initial momentum of a bullet fired upward as it leaves the rifle barrel, we can accurately predict how high it will travel before ending its climb and beginning its descent back to Earth.
Similarly, by measuring the initial momentum of a tennis ball fired downward into the ocean as it leaves a device, we could accurately predict how far it will travel before ending its descent and beginning its return to the surface.
Today, we will examine the initial downward momentum that triggered significant market slides or crashes between 1990 and 2022. We’ll then compare this last week’s market behavior against those historical events. As discussed in previous articles, we will use the McClellan Oscillator readings as a proxy for market momentum. Consider the following four examples:
July 1990:
July 2007:
February 2020:
January 2022:
Using the McClellan Oscillator readings to measure market momentum, we will assess the initial downside momentum in each case by taking the decline in the oscillator reading over the first several days before a rebound as our proxy.
We will refer to this measure as the “initial thrust.”
Initial thrust (downside momentum) measured from the above charts of SPX versus the magnitude of McClellan Oscillator decline in points:
To July 23, 1990, July Crash -83.37
To July 26, 2007, July Crash -89.90
To February 28, 2020, Covid Crash -139.2
To January 10, 2022, First Top -47.77
Examining now the downward trend this last week, our measurement for the last three days reveals:
To July 19, 2024, Thus Far….. -81.81 (-103.00 updated 7-25)
To July 19, 2024, Thus Far….. -81.81
From the above data, we derive two critical observations about the current trend from July 16, 2024. These insights are crucial and provide a significant advantage to the highly select subset of traders who fully grasp the concept of market momentum.
First, the initial thrust of this decline has yet to be fully measured. However, from the first three days since the July 16, 2024 peak, we can already observe that this thrust is at least as intense as those that initiated the July 1990 and July 2007 crashes. As the week progresses, we’ll see how it compares to the COVID-19 crash of 2020 and make more specific trading projections.
Second, if we study the charts from 1990, 2007, 2020, and 2022, we observe that after the initial thrust, the SPX consistently produced a countertrend move lasting two to six days. A second downward thrust in SPX invariably followed this rebound, which was even more significant than the initial thrust.
Today’s purpose was to project the amplitude of the immediate trend in days ahead by extrapolating the initial thrust. Today’s proprietary work from SevenSentinels.com is just one small step in analyzing the full extent of the Primary and Secular Trends that are just beginning.
As we move forward, subscribers can be sure that we will continually strive to bring the market’s trend into sharp focus across all time frames.
We will examine and discuss the overnight futures at 9:15 on Monday Morning.
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