"Dark Days" panic climax ahead for equities

"Goin' down, Party time, My friends are gonna be there too."

Equity markets could be on the verge of a “Highway to Hell”. Why?

Simply because

1. time-cycle,

2. price-cycle and

3. sun/lunar-cycle

patterns are coming into alignment.

I will focus on the third category of cycles in this article. I have often updated you on the first two subjects.

First, the dynamic time cycles have been updated frequently. All prevailing dynamic time cycles are downward sloping for stocks: Financial Stress Index cycles , Volatility Index cycles, main US indices cycles and high market value stocks cycles. We regularly update the dominant time cycles in this blog. I would propose to subscribe to not miss our free updates:

Regarding the second point on price cycles, I recently had an interview with Peter Eliades about his price-cycle projections. These price cycle projections are coming into alignment with a very special situation for the nominal 4-year cycle window. I would like to point to Peter's terrific work using the nominal Hurst model for his price cycle projections. He hosts his service at stockmarketcycles.com. ¹

We have taken our seat in the front row based on time- and price-cycles. Now, it will be even more interesting the next weeks with the sun/lunar cycles joining the party. The coming weeks from October 17 to October 30 will be fascinating.

One of the critical time cycles that will come into play next week are the so-called "Dark Days" cycles of past crashes.

The “Dark Days” Cycle

This cyclic pattern was research and published by Christopher Carolan. He received the Charles H. Dow Award in 1998 for his paper called “Autumn Panics: A Calendar Phenomenon”. ²

This cycle can not be seen on our solar calendar. We need to use the lunar calendar for that.

The Definition of a Lunar and Solar Year

Our solar calendar is based on the sun's movement, and it's the one with which people are most familiar. We define a solar year based on the movements of the sun, but use the movements of the moon to define a lunar year. But solar years have a different length to lunar years!

Unlike the lunar calendar, most western places across the globe use the solar calendar to track the passage of the year.

However, Muslims and Jews follow a lunar calendar. Islamic calendars are based on the lunar cycle, and its year consists of 12 lunar months. A Jewish calendar uses primarily lunar definitions, and each month begins on the new moon, but the years are based on solar years. Chinese calendars are a type of lunisolar calendar, a combination of a lunar calendar and a solar calendar.

The annual lunar calendar is based on the ancient babylonian calendar, which was the model for the Jewish calendar.

The annual lunar calendar marks the dates of the first new moon after the spring equinox as month one, day one (1-1).

Panic of past crashed labeled on the lunar calendar

Carloan compared the 10 largest single-day percentage drops from 1857 to 1997 and came up with an amazing cyclical result:

The timing of the major panic lows of 1929, 1987 and 1997 are within twenty-four hours of each other. In other words, the panic lows during the crash occurred on the same 2 days, if the lunar calendar is used.

The famous “Black Tuesday” panic from 1929 is dated 7-27, the one-day -22.5% “Black Monday” percentage drop in 1987 is dated 7-28 and the Hang Seng 1997 Crash with a -13.7% daily-drop is 7-28.

The following chart shows these three panics aligned on the lunar aligned time axis.

Dark Days Panic window (lunar calendar)

Fast forward to today…

What is 7-27 and 7-28 in 2022? Ok, check when the spring equinox in 2022 occured: 20. March. The 7th New Moon after that date brings us to September 25. This is count 7-1. Now add 27 days and we arrive at this coming week Friday 21 October 2022.

This week Friday-Saturday October 21-22, 2022 marks the repetitive “7-27 / 7-28 Dark Days" cycle.

That’s not the full story. I have prepared the following chart to make it even more clear where we are today in that cyclic context:

Equity Markets on 14. Oct. 2022 - compared to 1929 - Dark Days highlighted

The chart shows us 3 cyclic patterns now in place surrounding market panics:

1. The “Dark Days” fall on 21.-22. October next week. Compared to 1929 and even if the markets have already gone down, this has given the index another -30% correction with extremely heavy selling.

2. The leading movement is synchronized with the Jewish High Holidays: From a leading top in the market (point 1), there is a correction to Rosh Hashanah (2). Rosh Hashanah marks the beginning of the Jewish calendar. From there, a very small rally begins, ending on Yom Kippur (3). Yom Kippur is the emotional climax of the Jewish faith’s high holy days. This cyclical pattern is not well known - but has been seen in all major crashes in the past. See also the alignment in the chart in 1929.³

3. The next cyclical pattern which is seen at financial panics is the so called “Puetz crash window”. According to that pattern, all US crashed had the same important 6-weeks-window signature around a solar eclipse. According to that pattern a panic begins near a full moon that occurs within 6-weeks of a solar eclipse. This year, the solar eclipse occurs on 25. October.⁴

The cyclic configuration we recognize here is unique and does not occur frequently in this bundling. The next 2 weeks are a fascinating time for cycle analysts!

Regards,
Lars

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Disclaimer:

The publisher does not warrant the accuracy or completeness of the information provided on this site. All statements and statements contained herein are the sole opinion of the author.

Lars von Thienen / WhenToTrade is a publisher of scientific cycle analysis results for global markets and is not an investment advisor. We do not provide personalized or individualized investment advice or information tailored to the needs of any particular recipient.

No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned.  

Any projections, market outlooks or estimates herein are forward looking statements and are inherently unreliable.  They are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.

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1. Eliades P., von Thienen L. (2022): YouTube Cycles TV: “Special Market Cycles Report with Peter Eliades: September 19, 2022”, LINK

2. Carolan, C. (1998): “Autumn Panics: A Calendar Phenomenon”, Charles H. Dow Award Winner 1998, https://docs.cmtassociation.org/docs/1998DowAward.pdf

3. Primary scientific source unknown, Aaron Brickman mentioned these relations also in a guest podcast, “Hagmann Report”

4. Puetz, S. (2009): “The Unified Cycle Theory - How Cycles Dominate the Structure of the Universe and Influence Life on Earth”, Page 66