The November bottom and the following rally have now charged to the upside, which no longer fits into the wave 2 bullish move I did have. An instant wave count review should always be done if Minor degree moves cannot provide the confidence to trade it. This would only be a Minute degree run, but that would be enough to screw-up a wave count for life. This would be an expanded pattern, with the SP500 and the DJIA looking about the same.
Do all those emotional investors deserve a Santa rally? Not from my perspective they don’! Investors do absolutely, “Nothing”, as stock prices start turning green again. The hardest investors work, is lifting their fingers and pressing the mouse button. Of course, in today’s world, they need Artificial Intelligence (A.I) to do basically the same thing.
Some say investors deserve more, due to the risk they take. What a pile of BS that is, as investors back in 1984 took all the risk.
Many good mainstream analysts are also mentioning the Death Cross on many of the indices I cover, and this Nasdaq is no exception. The 50-day is ready to kiss the 200-day MA which is also the Kiss Of Death” for a bull market. Anyone that stays invested or brushes off the importance of a technical indicator like a Death Cross, will get hit hard. It will be worse for all those individuals who are getting ready to retire. I think many investors have no clue how big the world tech bubble has become as I see it as a Cycle degree peak and not just a short-term correction.
I do track the Gold/Nasdaq ratio and today it sits at 5.7:1 which is extremely expensive when it takes 5.7 Troy ounces to buy one unit of the Nasdaq 100. A cheap ratio would be 1.18 so there is a massive amount of adjusting that still needs to happen. You don’t want stocks at fair value as that is ridiculous, only crushed stock index prices make a good investment.
All the markets need is some “bad” numbers reported and this happy investor mood can turn sour pretty quick.
The S&P Midcap futures have not acted like the DJIA or SP500 has at the daily chart scale. The Midcaps have not traveled nearly as far down as the other indices have, where we can see a higher bottom completed already. The short story is that there is an excellent chance that the Midcaps can soar higher on a “C” wave bullish move. Futures daily charts are the best to look at the 50-200-day MA where we can see that a Death Cross has already formed. This is about as bearish of a signal that we can get. This market can charge through the 50-day MA with little effort, but could then run into stiff resistance at the 200-day MA line.
A short correction can still happen next week but any move above November highs would be the minimum to help confirm a “C” wave bullish move is still in progress. At 1920, resistance should stiffen up, but there is never any guarantee that any bullish trip still to come, can’t end early.
I have no useable Gold/Midcap ratio data based setup, but presently it takes 1.54 gold ounces to by one unit of the S&P Midcaps
If you want to witness wild diagonal waves then the VIX will give them all to you. Needless to say, this makes wave counting the VIX all the more challenging. The VIX also has prime examples of vertical spikes in both directions. I show a pattern that sure looks like it is still correcting with another zigzag. I would love to see the VIX crash and take out that November low. If the VIX still is this bearish, then stocks should remain bullish in the short term.
The commercial hedgers are net short the VIX so that doesn’t bode well for an instant stock market bearish decline. Mind you I have seen commercial traders positions change in rapid fashion and we won’t know that until every Friday afternoon. The Death Cross has been triggered but at these intraday levels, I don’t find them all that useful.
If the November rally is a bear market rally then this has to get confirmed by completely retracing my “A” wave bottom in Minute degree. This would be below the 16.09 price level.