At this time it looks like the DJIA has peaked and the big question is are we heading into another correction or was this fantastic move just a bear market rally? Rallies that travel at this speed always seem to run out of steam and then turn and head the opposite way. I show a Megaphone pattern which can happen in diagonal moves as well. The 4th wave rally traveling into the wave 2 positions is a dead give away that we are dealing with a diagonal run of 5 waves.
The Gold/DJIA ratio is down a bit from its extreme but yet still far too expensive. I would like to see our present Gold/DJIA ratio get chopped down to 14:1 before I get super bullish on the DJIA. Of course, many fund managers are frothing at the mouth as they, scream, “Buy the Dips”. DowJones_GoldPrice Gives you an idea about others using the Gold/DJIA ratio over a bigger time period.
That might work for short term traders, but for a long term hold the DJIA is still going to get shredded. If the Cycle degree peak is true, then at a bare minimum the DJIA would have to crash below 14,000. Others are as bearish as I am, and I’m sure many of the wave analysts are forecasting big bearish moves as well.
I’m sure the Eurozone is going to be bogged down with all sorts of fundamental problems which we here or read in the news. The short version is “I don’t do fundamentals.” Besides that, I don’t think a single analyst can give me a fundamental reason for each Intermediate degree or higher turning. Forecasting a price crash to come, we know fundamentals will change, so does technical analysis change the fundamentals?
Just like the USD trend is up, the Euro is going the opposite way. Both these currencies need to travel the opposite way in order for gold to soar like they all say it will. After all gold is in a bull market right? Since the 2008 peak, the Euro had 6 major bullish phases which all were completely retrace except for our present Euro rally. Do you know how bullish everyone was on the Euro in 2008, yet the Euro turned and crashed?
2008 was also an important year as oil crashed as well.
Fundamentals are lagging indicators, and they mean little after every analyst on the planet is spouting the same gibberish.
Yes, the commercials are net long with their Euro positions, but they removed 5105 long contracts during the shutdown. The speculators are bearish and last week they turned bullish as they added 9,229 contracts last week.
The COT report is a mixed bag and when there are no real extreme readings then I rely on my trend to give us a clue. I see the trend is still down on this monthly and even weekly charts. The wave 3-4 rally has an expanded pattern in it, which means a complete retracement to a new record low should happen. There are many expanded patterns that develop and to not look for them, will always give us a surprise.