Daily Archives: February 12, 2018

10-Year T-Notes Crash Review

The fear of higher rates turns bullish stock investors into chickens. When bonds implode this sends interest rates skyward, which the Fed is powerless to stop. If Russia and China are dumping only higher rates might stem the tide. Due to the nature of the choppy decline, there is the strong possibility for this T-Bond chart to soar to new record highs one more time.

We are still a bit short of touching my invisible bottom trend line, so a bit more downside can still happen.

The entire T-Note bull market is an insane example of a diagonal wave structure. Longer term the entire bull market can get retraced which does not bode well for rates in the longer term.  Until this potential 4th wave bottom is cleared up a complete implosion of T-Bonds is not in the cards at this time.

Eventually T-Bonds will also hit a Cycle degree 4th wave peak, which would coincide well with the stock bottom in Cycle degree wave 4.

Nasdaq 100 “Big Dip” Update.

The Nasdaq did not display a double bottom as it crashed well below the previous low, followed by a wild rally as well. We could be on the second set of a 1-2, 1-2 wave count, and a small third 1-2 wave may also show itself.  After that, any 5 wave structure will be harder and harder to see, but we would also be running out of degrees after a wave 4 in Minor degree has finished. This could take all of February to play out, so it’s not going to happen overnight.

Usually all 5 waves play out in a rapid fashion, but then this market will give us a hard time once an “A” wave in Intermediate degree has finished. There are still many variables that can happen, so until a new record low is achieved, this market can give us a hard time.

As I post the Nasdaq is pushing higher, but mid week can also be great reversal days.  Between the 5800 and 5600 price levels we could run into some strong resistance, so any 5th wave in Minor degree should be ending at that time as well.

Sp500 Intraday Rally Running Out Of Steam?

The SP500 created a double bottom in February before it rose in a violent fashion ending on the upside last week. At this time I’m going to count this as a 1-2 and then another 1-2 count, which would mean a longer wave 3 count. All we need is one more 1-2 wave structure to complete, then we would certainly be getting a long wave 3. It can all fall apart very quickly, but the main idea is to eliminate wave counts as soon as possible.

This great looking double bottom should not hold if we are over into the big bear market side already. ( The Big Dip) Fundamentals have not really changed, but that has always been the case as fundamentals are lagging indicators, not leading indicators. It took well over 8 years for those horrible fundamentals in 2009 to change to better fundamentals by 2018. At the extremes, fundamentals will always tell us the wrong things, just like they did in 1987, 2000, 2007 and now in early 2018.  Rate increases might be enough bad fundamentals to push this market down, but other fundamental reasons may appear at anytime.

EWI is also bragging that they they have hit the top, which they seemed to be pretty good at doing. Creating a great short trade setup can only benefit a very small percentage of traders, but they seemed to miss more bull markets than we can shake a stick at. Missing any major bull market is unacceptable as the older we get, the fewer bull markets we can afford to miss.

Steven Jon Kaplan started to call for a bull market back in late 2008 already, as the VIX peaked and insider buying reports were flooding the mainstream news sites.   This is when the stock bulls should have been screaming, “buy”,  but sadly enough all the wave analysts were bearish just like the majority were.

I’m sure this same setup will happen again and all the wave followers will miss another 8 year bull market. From 2009 to January 2018 the SP500 gained about 430%, which was only an Intermediate degree 5 wave run. The next bull market will be a 5 wave run in Primary degree, which I’m sure will give participants, 500% or more gains, in another 8 year bull market.

All the fancy wave counting in the world is pretty useless if we keep missing bull markets. We are still some time away from a real, meaningful bottom as a simple 10% correction will not do it. Even a 50% correction will not do it, as that would only suggest a move back to the average.

When solar cycle #25 arrives, then you no longer should be in any  bearish positions, as our sun makes or breaks all bull and bear market cycles.  The sun overrides the power of the wave counts at anytime, and it will be no different when solar cycle #25 starts.