Daily Archives: February 5, 2018

SP500 February Meltdown Review: How’s Investing For The Long Term working For You Today?

The markets got serious this afternoon as another near vertical decent move played out. The January meltup has not turned into a February meltdown. This is a classic move with a counter rally in progress. This could be just a small rally but should produce some sideways action for a little while.   I still can’t see wave 1 in Minor degree, but I’m sure it will show up by next week or even sooner.

The VIX blasted up to just under $40 with a massive spike which must correct in time. No spikes opened on the way up so that is actually a good thing.  I may still have a small degree 4th wave rally that needs to play out, but when we do switch into a higher degree, the counter rallies will be bigger and take longer. In the first few days the markets lost about a trillion dollars and I bet this has just tripled in the last 3-4 hours of todays trading sessions.

You’re not going to find this “lost” money  in the lost and found department, because this money has disappeared in a puff of electronic smoke.

Reefer Madness, Canadian Style!

The Marijuana market in Canada has imploded as the legal supply side has already caught up to the legal demand side. New growers have flooded the markets, and most of them will disappear if their growing costs cannot compete with the top growers.

The wholesale prices of marijuana have already been crashing for several years, which is a main indicator that supply is flooding the markets.

The vertical move of HMMJ was suspicious the first time I saw it, as it’s not a good thing to jump on a bullish bandwagon after it already has gone vertical.

HMMJ has just about reached the previous 4t wave dip I had mentioned, but this all means very little in the big scope of things. This could all “flat line”  if it turns into a one hit wonder. Tulip Mania was a one hit wonder so Reefer Madness could also be another one hit wonder.

Mini SP500 Intraday Rally Update

I think our present little rally doesn’t have a very long life span as we just completed a potential expanded zigzag type of a move. Since diagonal wave structures can act about the same way, which should be ready for some hidden surprise moves as well.  In the last year or so I have developed a damn paranoia about markets, reversing and charging to new record highs. Once the entire January rally is retraced we might get a better feel if this market is already over on the bigger bearish side. It’s still better to catch a crash bottom that has turned into an “ABC” crash than not catch it at all.

I’m sure every wave analyst goes through the same situation. This is also a great reason to keep intraday wave counts at the smallest degree levels because it makes us more sensitive to the moves that are going on. We are now on the 5th day of a market meltdown, which many only think is a correction, so buying on the dips is being encouraged. Little do they know that this impending big correction will be the, ” The Mother Of All Dips”.

At every major top in 2000 and 2007, the analysts all mentioned buying on the dips, but these dips turned into Grand Canyon like gorges.

I’m looking for a Cycle degree correction and for a potential 3 waves in Primary degree I would need a specific wave count in order for the entire move to confirm itself.

I need 6 sets of 5 waves in Minor degree, 5 sets of “ABCs” in Minor degree and just one set of 5 waves in Intermediate degree.

Sure, we’ve seen all the fundamentals improve, which is expected in a big bullish price move, but 5th waves are always the weakest compared to wave 3 bullish phase of any bull market. From March 2009 the SP500 enjoyed a 430% gain, which only the true contrarians of this world can take advantage of.

The two major tops since 2000 are all wave three peaks that must be completed with a “higher” degree sequence. 2000 was an Intermediate degree wave 3 peak followed by a Primary degree, wave three peak in 2007 and now in late January,  we are faced with a wave 3 in Cycle degree. Sometime towards 2029, we could be faced with a Supercycle degree wave three peak.  Each 5 wave sequence leading up to any wave 3 peak must also be in sequence with the right degree.  The 5 waves up from the 2009 bottom were 5 waves in intermediate degree, so the next bull market must contain 5 waves up in Primary degree.

Flipping wave counts around like a line cook flips burgers is not an option. Most wave analysts refuse to go back to 1932 and start a fresh count,  as that sounds too much like work. Most wave analysts could not draw out an extended wave three because if they did, we sure would not be counting waves in SC or GSC degree.

The SP500 is resuming its downward trend as I post, so get ready for the wild ride to continue.

Gold Intraday Update, Still In A Correction?

Gold and gold related stocks have taken a beating along with the regular stock market. Gold stocks are more related to what the US dollar is doing, not necessarily what the fundamentals are doing.  I think there is more downside to go with gold, but the need for a safe haven asset class, is pretty strong.  I don’t think even $1304 is deep enough for any wave 2 bottom to be completed so we have to be aware that this gold correction still needs to haunt us before another great leg up can occur.

DJIA Weekly Chart Melt-Up

The stories are rampant that experts agree about a potential stampeded into stocks, which some are calling for a 20% meltup! Hate to bring you the bad news, but the meltup has “already happened”. For the last two years, since my 4th wave bottom we’ve had a consistent meltup unparalleled in financial history. This is nothing really new as the herd of analysts always seemed to be late in recognizing major turnings as well. In this case it took them a full two years before they saw it as a meltup situation.

One day 2-3 years in the future, we could see the entire situation reverse when the market has already completed a meltdown. Our present market meltdown, is already 5 days old, but the entire 5th wave meltup will get retraced as the 5th wave meltup turns into a Cycle degree 4th wave meltdown. I’m sure that towards the end, we will see vertical moves to the downside which helps to confirm a “C” wave crash.

I drew out another Cycle degree flat and counted how may 5 wave sets and 3 wave sets I need in order to qualify a flat correction. My smallest degree level I will use is in Minor degree, and I would need 6 sets of 5 waves in Minor degree, with 5 sets of “A, B, Cs” in Minor degree. We only need one set of 5 waves in Intermediate degree, which will play out before the Cycle degree crash comes to an end.