Editor's note: You can always find reasons not to invest. According to our colleague Greg Diamond, editor of the Ten Stock Trader newsletter, a major inflection point is coming... And if he's right, it will catch a lot of investors off-guard. But as Greg explains in today's piece – which originally appeared as one of his Weekly Market Outlook issues – you should always look ahead and plan your next move.

Also, the stock market and our offices will be closed on Monday in observance of Labor Day. We'll pick back up with our normal publishing schedule on Tuesday after the Weekend Edition. Enjoy the holiday!

Ignore the Negativity... Focus on What Comes Next

By Greg Diamond, editor, Ten Stock Trader

"Hell on Earth"... That's how Civil War soldiers described the prisoner-of-war camp in Andersonville, Georgia.

My great-great-grandfather William Wegner – a Union soldier – was held there for 10 months after his unit was captured. He was only 20 years old.

In January, I took a short trip with my dad and brother to visit the site – now the National Prisoner of War Museum. As you can imagine, it was intense.

There was no shelter in this camp. The Confederates had built giant walls around a field and crammed tens of thousands of Union soldiers inside of them. The only water supply – a stream that ran through the prison walls – was contaminated. And there was little to no food.

It's estimated that 13,000 soldiers died of starvation, disease, or exposure at Andersonville. On average, around 100 prisoners perished every day.

While reading about the horrors that William and other prisoners went through, I turned to my brother and said, "We can't complain about anything in life ever again."

He agreed. It was a sobering, eye-opening experience to say the least.

So, what does all this have to do with the stock market?

Well, there are infinite reasons to complain about what happens in the world of trading... You miss a trade, lose money on a trade, or don't make enough money on a trade. The list goes on and on.

When things don't go your way, it's easy to become negative and make excuses. But as I often write, this accomplishes nothing.

Complaining just makes you feel discouraged and steers you away from what you should be doing... focusing on what comes next.

This doesn't mean you won't have negative experiences while trading. We all do. There's no such thing as perfection in this business. But at the same time, you have a choice...

When something goes wrong, you can let the negative energy control you, or you can take a different path – look ahead and plan your next move.

I'm expecting fireworks in the stock market to close out the year. What's coming might scare some investors. But as I'll explain today, I'm looking forward to capitalizing on it – using technical analysis...

How do I figure this all out? How can I make these calls a few days, weeks, or months in advance... and do it year after year?

In this case, I've applied the methods of W.D. Gann and the principles of time analysis.

We're looking at an important two-year cycle in 2024. And to understand it, we need to review some historical data.

Here's a price chart for the S&P 500 Index. This chart allowed me to call the COVID-19 meltdown in 2020 and then the top in 2022...

Click the image for an expanded view.

The gray bars at the top of this chart mark important Gann time factors... I've inserted the dates and arrows in red and green to pinpoint highs and lows.

The key here is to understand how a market trades into a time factor, or a cluster of time factors.

We can look ahead to the probabilities fueled by these time factors. The risky part is calling a high or a low... That takes patience (and time) to determine.

Both in 2020 and 2022, stocks rallied into these time factors and created highs.

The current time factor starts this week – from August 30 into September 9. The fact that stocks have rallied into this time factor drastically increases the probability of a high in the market.

These are the types of signals that can help you make money – and prepare for what's next.

Let's review this scenario in one leading stock within the S&P 500. Here's the price chart for technology giant Microsoft (MSFT) on a weekly time frame...

Click the image for an expanded view.

From the low in early August 2024, I've marked a wave count above in red...

For this, I'm using Elliott Wave Theory – a complex but incredibly useful technical practice that makes use of the Fibonacci sequence. In simple terms, the theory is that prices move in five "impulse waves" followed by three "corrective waves."

If August 22 marked the wave 4 low for MSFT, we'll likely get a wave 5 rally.

The problem here is that MSFT is failing to break above the previous support level (the lower gray dashed lines). There's also a Fibonacci confluence zone around the $440 level (red box). These zones are areas where Fibonacci levels overlap with other technical signals. And they often indicate strong support or resistance.

Now, this means the stock could stage a big spike up above the confluence zone. But if MSFT makes a lower high into the time factors, while the Nasdaq, semiconductors, or other Big Tech stocks make a new high, that sets the stage for a massive market inflection point... and, likely, a big reversal.

If you like "classic" technical analysis, this could be setting up a "head and shoulders" pattern into important time factors... marked by three peaks as the stock shifts from a bullish to a bearish trend.

In short, technical analysis shows why you can't get stuck as conditions change...

As we navigate 2024, I may not be right about every single wiggle up and down on every technical chart. But you can bet I'll be trading the market volatility.

It will likely be a tough environment for many investors... And a lot of folks will be overcome by negativity and pessimism.

But that won't happen to us. I'm looking to profit from what comes next.

Good trading,

Greg Diamond, CMT

Editor's note: This week, Greg shared his blueprint for the stock market through the rest of the year... why the market's next big move could be "lights out" for one of the presidential candidates... and why – based on the historic turning point he sees coming – some stocks could keep soaring, while others are due for a painful decline. If you missed his urgent briefing, it's not too late... You can still watch the replay video here.

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