As subscribers and Twitter followers at @baminvestor and @bamglobalpro know, the BAM S&P 500 Model has been calling for a major stock market TOP into April 10th. This expected turning point high is predicted to occur into the early morning hours–ideally between the 7:45-8:30am pst period–with an estimated price target of 1580-1585.00. Assuming the market tracks the model properly and posts a reversal high on April 10, followed by late session weakness, the bigger-picture models are pointing toward a decline into April 15-17, followed by a bounce, followed by severe weakness into about May 6 to kick-off the decline.
Price projections for the severity of the assumed decline are tough to measure until the market rolls-over, but once we’re able to gather readings from our proprietary BAM-VI (Velocity Indicator) we will update subscribers. At this point our forecast calls for a decline of at least 10%, and using history as a guide, our model tells us that price extensions within inversions (represented by the 21 month advance spanning November 2012 through April 2013 period) are unwound four times as fast as they originally unfold. We call this our “rule of four” and it implies a complete give-back of all gains posted during 2013, over a short 5-6 week period (or into May 15-22).
Perhaps more troubling, is the fact that our Russell 2000 Model and our Nasdaq 100 model are both in a crash fractal configuration as we write, and although these fractals do not necessarily have to unfold per the script, we’re always very cautious when they appear. That said, we’ll be monitoring global markets very carefully for clients as we move forward because the backdrop is proper for a full-blown debacle during 2013.
Long-time followers know that we built the BAM Model through the study of fractal boom and bust periods and we have an in-depth knowledge of the 1929-1933 period, the 1987 period, as well as the May of 2010 flash-crash period. All of those events were predictable as all unfolded within crash fractals of various degrees.