The huge Head&Shoulder pattern now stands out very well as the Nasdaq started to implode in the first part of May. In a wild and wooly bull market, the right shoulder would never hold and in this case, the Nasdaq has already declined far enough to create some serious damage to investors portfolios.
I think trillions of dollars have been wiped off the books already and I’m sure more will still go up in a puff of electronic smoke. We have until about June 21 when this contract month has to move to the September month which can cause some more convulsions that few are expecting.
I’m expecting a Cycle degree correction with an Intermediate degree bottom still very far away. If the December bottom is true as an Intermediate degree bottom then we can visualize where my new “A” wave may come in at. This would be close to the 5800 price level.
I’m sure the stock bulls will offer their life so that the bears can have a great barbecue this summer.
During the first part of June, the markets began to soar which at this point is one of the largest rallies since April.
During the last 2 weeks of May, the pattern changed again, which I can count as a diagonal wave structure containing 7 waves. The SP500 E-Mini has now entered my previous 4th wave position but has also entered 2 previous smaller degree 4th wave peaks as well.
In a bear market rally, so many previous 4th wave peaks offer serious resistance even though this stock rally can advance some more. Going above the previous 4th wave in Minute degree can happen but that is a bit rare as well.
Yes, I moved my Minor degree wave 1-2 around but basically, May produced 5 diagonal waves down.
Many analysts are very bullish saying it’s time to jump on, but that usually never works well if a bear market is much bigger than anyone is thinking right now.
I think the markets have to give us a Cycle degree correction, as a Minor degree move is just window dressing at best.
This contract will only last until the 3rd Friday of the contract month so by the end of June investors have to make a huge move into the September contract month.
So far the SP500 has displayed some nice impulse waves but the May decline best fits into a diagonal.
There are only so many seats on the bullish bandwagon and when the music stops, can you jump up fast enough and forfeit your seat?
Now that the markets are soaring does it mean the bull market is back? This move for June is not natural because there are only very small corrections. I’m sure the bears have been horned by the stock bulls but is it time for this trend to reverse?
The May decline fits best as a diagonal with a 7-wave count. Any wave 2 rally will find stiff resistance at the previous 4th wave top and in this case, I have 3 previous 4th waves that this present wave 2 has touched.
Sure we can go higher but then a higher degree may also be involved. I changed the location of my Minor degree run and we should know by the end of next week or so.
Another set of 5 waves down in Minute degree would have to happen and nothing short of wave 2 retracement, would be acceptable.
The Gold/Djia ratio got better, but it’s still far too expensive presently at 19:1. Cheap would be closer to 8:1.