While the majority of investors are pushing the SP500 higher, I’m building the bearish picture. Most of the bearish pictures I can draw do have multiple choices most of the time. 8 choices would be normal and constantly eliminating anything that will not fit is the name of the game.
A near vertical move with barely a correction could work well as part of a wave 1 pattern and the mainstream analysts are foaming at the mouth in how bullish this setup is. To confirm the bullish scenario the SP500 would have to continue to soar to much higher price levels, otherwise, we are being blinded by a bunch of smoke and mirrors media news.
There are lots of bearish moves just like this and most of them were fully retraced. This weekly chart has pushed the SP500 past the 50-day MA, with the 200-day MA still being far below present prices. The short story on that is that the death cross on this weekly chart is in our future as we are still under the influence of a golden cross that happened in 2009-2010.
Price wise the SP500 must crash well below any support we see and that is before the 200-day MA gets hit.
I’m sure that will happen as flogging a tired stock bull will eventually just piss it off and they could flee in all directions except up.
Commercial traders are not that skewed to the bearish side but bearish all the same. This also tells me that their positions can change rapidly which will happen once the SP500 gets into another oversold condition.
The Gold/SP500 ratio tells us another story as this morning it was 2.16:1. We are still very close to a record Gold/SP500 ratio high, so there is nothing that I would consider cheap when compared to the gold price. In order for the SP500 to become cheap again we need to go below a potential 1:1 ratio or even lower.
This is the chart that tracks companies on the Shanghai index. This is the S&P created index and for now, is the best I can track the Shanghai index with. I’m convinced that any fundamental news that comes from China is controlled by China’s highly efficient propaganda machine.
The fundamentals in China are far worse than anything you may have been reading. It’s not rocket science but the Chinese economy is slowing much faster than we think. China is a nation of zombie, companies, banks, and cities. I could go on and on but the short version is that China is all built on debt, and so far has broken all records making the 2008 crisis seem like a walk in the park.
The peak in 2008 matches a major peak in most of the commodities, which I think is wave 3 in Cycle degree. The bear market has been going on for about 10-11 years and I see it far from being finished before any huge bullish phase comes down the pipeline.
Right now the two trend lines put the Shanghai index in no man’s land and that the present rally is just another bear market rally. There is a very convincing inverted zigzag I see and they usually get completely retraced. Mind you that could still take a few years to play out especially since solar cycle #24 is still running.
I don’t have a big Gold/Shanghai ratio database accumulated, but enough to give us some extreme readings. A low ratio means that the Shanghai index is cheap when compared to gold.
Today this ratio sits at 2.37:1, which is down from an extreme of 6.61:1. In 1996 this ratio was 1.29:1 and the Shanghai may even come back to this cheap ratio.
Since late 2018 the Nasdaq has created a bottom and has been on a bullish move that is hard to imagine that it could still be in a bear market rally. Only time can give us an answer and at this time there still is a good chance that a new record high is going to be established. If that is the case then the right side should eventually push that flat line up.
A right shoulder in a bull market would push much higher again, but if a bearish turn awaits us then the right shoulder would just crash. I would give that right shoulder about a 50-60% price retracement and after that, a complete bull market failure can still happen.
At the beginning of bull markets, right shoulders fail to hold back the bears most of the time, but when we are closer to the end of a bullish phase, the right shoulder is less likely to hold.
Last week the Market Vane report showed that on the 12th there were 68% bulls present. That is down from a 24 month high of 91%. The more bulls present in the survey the less chance of a big bunch of stock bulls still to come in. Of course, the only way the bullish herd can push it higher is if they just came out of a secret tunnel they’ve been hiding in. 🙂
God knows the world has been on a massive tunnel digging spree, maybe there is a big group of stock bulls living in the Center of the Earth!
The Gold/Nasdaq ratio is always at work and you won’t find any ratio in your analytical toolbox. The Gold/Ratio of anything always gives us a reading when something is expensive or cheap when compared to a Troy ounce of gold, in US dollars.
A cheap reading once was 1.18:1 and my most expensive reading was 6.38:1. Today the Gold/Nasdaq ratio sits at 5.61:1 which still makes the Nasdaq very expensive.
I started to look at the Netherlands stock market with the EWN (ETF) but when I saw this ZMA index, its pattern was completely different. In the long run, ZMA should act just like it did in 2003 and then decline again like it did in 2008.
For over 18 years the ZMA index has produced nothing but bear market rallies. Of course, the present top needs to crash or decline to help confirm my suspicions. I can draw you all sorts of subjective trend lines or wedges if you like, but it would still take a few years for a new bearish decline to show itself.
It looks like a triangle could be in progress, and we would need the “E” wave to show itself. The 2000 peak would be the Cycle degree peak but I used my idealized commodities charts to count this out. After the Cycle degree 4th wave has arrived then it will be important to know that we will have at least two options to choose from.
From the 2000 peak to the 2009 bottom solar cycle #23 was in progress, after which solar cycle #23 handed control over to solar cycle #24. I just shake my head when people think that the sun has no bearing on climate change and life on earth.
I have no Gold/ZMA ratio database set up but I took two readings as a starter. March 11 gave us a high reading of 2.41:1 while the 2009 low reading was about 4.73:1.
In general visitors from the Netherlands are about 8-9th on the ranking list.
I do not have the time to keep the ZMA wave count maintained as it can take years to fine tune any wave count.
This DJTA provides yet another look at the markets and the transportation industries. Since this is more like a “First Look” at this index I’m sure future adjustments will have to be made due to the fact that a Minor degree move at this time could be out by one degree.
I left the Primary degree 5th wave uncapped due to lack of space. Leaving any 5th wave uncapped means that wave analysts have no clue where they really are, or that they quit trying to decipher the next higher degree.
I don’t know where we really are as well, because it takes years babysitting and maintaining any wave count before we can get the courage to trade it.
If the bigger bear market is still coming then this index will have no choice but to register a new record low in 2019. In order for that to happen a complete retracement of all 2009 gains must happen.
I do not have a Gold/DJTA ratio database set-up but we have two that will give us an idea of how cheap or expensive the DJTA is when compared to US dollar-priced gold.
Today this ratio sits at 7.82:1 while at the 2009 bottom low this ratio was about 2.27:1. We want to see this ratio to compress making the DJTA index cheaper. We may never see the Gold/DJTA ratio of 2.27:1 again, but we may see 4:1.
This S&P Midcap bullish phase produced another wild ride to the upside. It looks like 5 waves up as the subdivisions were very small. A single zigzag crash ending in December 2018 can make all this fit into a diagonal set of 5 waves down in Intermediate degree.
The Midcaps found resistance just a bit above the 200-day MA line which still leaves the Midcaps under the influence of a Death Cross. March can also give us fantastic turning times in both directions, but we have to have the patience for this to play out in the short-term.
I don’t have a big database on any Gold/Midcap ratios but today we are sitting at 1.48:1.
The commercial hedgers are still net short the S&P Midcaps but not by all that much. In other words they can swing to a net long position fairly quick.
Since the December 26, 2018 crash low the DJIA exploded in an upward path that any sane wave counter would see five waves up and make a call that the Dow is heading to new record highs. Maybe?. The Death Cross at the 25,100 price level should give the stock bulls reason to pause as there is only a slim chance that a Golden Cross is still to come and even if a Golden Cross did happen, it may only be a short-lived event.
Commercial hedgers are not all that deep with net short positions so counter rallies can happen. I’m looking for a diagonal 5 waves down so another zigzag could play out, with the price traveling to a new record low.
Complete retracement will help to confirm that this stock rally was just another bear market rally. This pushes any Primary degree “A” wave into the future and fear has a funny habit of creating mini-panics which can turbo charge any decline.
At 20:1 the Gold/DJIA ratio makes the DJIA still as expensive as ever so that alone keeps me from looking for bullish wave counts.
This DJIA is about the same as the SP500 in how far this bullish move has gone. The DJIA still has a Death Cross below it even though the DJIA blasted right through both MA lines. At 24,200 the 50-day MA might give the DJIA some support, but any correction could keep this Death Cross alive much longer.
The commercials don’t have a big bearish position, so this can give the DJIA a bit more wiggling room in the short term.
I’m not going to spent too much time on this update but the Gold/DJIA ratio is still near the extreme expensive side of 19.62, better than the 21:1 ratio I did have back in August 2018. A cheap DJIA index would be 8:1 but that will not happen anytime soon.
The SP500 and other indices wave positions I had have now pushed further that I would like to see, so changes have to be made. This 2800 price level has been hit for the 6th time this year alone, so it will be critical to see how long this bullish move will last. Even though this stock rally looks like a real impulse wave, there have been many like this which have been completely retraced. Gold is just one example.
The commercials are not skewed that much to the bearish side so that adds to the uncertainty to this bullish phase, in the short term. The Gold/SP500 ratio helps as it is at 2.10: this morning. This is still about as extreme as it gets as my last extreme was 2.41:1 back in September of 2018. We also have one wicked H&S being set up and in a bigger bullish phase, the right shoulder will not hold.
Market players are always waiting for something to happen that will paint a bullish picture, like the trade talks. Fundamentals change like the wind and basing investment decisions on the words of a politician usually never last as emotional investors can interpret any news a thousand different waves. There are many contradictions made by the mainstream analysts and that alone is enough to take pause to see how long this bullish phase will go.
HEDGE decline to new record lows which makes it out of sync from the SP500 index by a large margin. HEDGE has far more “slippage” in it than I originally though, which makes it unsuitable for a long term investment/trade. When there are options inside an inverse ETF, I would not waste my time with it, so I will no longer spend my time wave counting out HDGE. Besides that, if HDGE ever got closer to the $5 price level, an inverse split can happen. A normal inverse split can be a 4:1.
My updates are going to be erratic and reduced this year. I will post updates on my page.
Several wave counts I was working on have now started to break down and no longer fit. This always calls for a review and at this time the obvious move is my Cycle degree wave 3 August 2018 peak. The December 2018 bottom and our present rally display more and impulse wave than a counter rally wave. Many rallies in the past also showed 5 waves up but ended up getting completely retraced.
The Nasdaq is still under a Death Cross and now has run up against the 200-day MA line. If this trend is going to continue then at least the 200-day MA can offer some resistance, but a bear market rally can completely retrace this entire bullish phase. Only time will tell but the tech is taking a beating around the world as its being used to brainwash all of us. Our smartphones have already turned us into digital zombies and governments use it to spy on everybody!
The recent attacks on the Australian parliament are just small examples of how tech is being used to try and control us. Every democratic government is coming under attack and Canada is no exception.
If you think I’m paranoid, I have a reason to be since my Facebook account got hacked last year. How many times have you heard about a Bitcoin robbery and hacked accounts with hundreds of millions gone missing? As you walk the street or are just shopping, look up to the nearest cam and wave, as we are constantly being spied on. Soon when you are caught doing something illegal they can fine you, and steal the fine out of your account by the time you cross the street.
All this may sound crazy but I’m reading about that stuff all the time. We haven’t even touched social media as it is the biggest spreader of false news today. The point is that tech comes in cycles and a bearish cycle is on its way.
The expensive Gold/Nasdaq ratio topped out at 6.38:1 and today this ratio stands at 5.25:1. We have a long way to go before the Nasdaq becomes cheap again when compared to gold. Short term the markets can head higher but there are large amounts of protective sell stops below all present prices.
In the last week, the DJIA and other markets have kept moving higher than what my wave count would allow. Our present rally that started after the December crash is looking too much like an impulse that is just now adding a spike to the upside. We also have an H&S pattern forming, and if this bullish phase is going to continue to new record highs, then any right shoulder that will form will not last. Of course, the opposite would happen if this bullish phase is coming to an end.
I moved the Cycle degree wave 3 over, but that may be a temporary location only. Commercials are still short, but not all by that much so future bullish moves can still happen. When exploring a new wave count it can take months in that new position before the markets make or break it.
It may be hard to swallow that an expanded move can crash this deep, and I am pushing it to the limit. The mainstream analysts just love it as the markets recover from a bear market low and are now escaping this bear market. The market is also getting close to the 200-day MA, so we will see how much power the DJIA really has.
So far the USD, stocks, and gold have been in sync to some extent, so they can all crash together as well. It happened in 2008 and it can happen again. The Gold/DJIA ratio has pushed to 19.60:1 which is still an expensive extreme by any stretch of the imagination. Right after Presidents’ Day, the markets will be at a full moon, which can also produce devastating reversals. March has been famous for major reversals and in this case, it could send the markets south.
This market bullish move, if there is more to it, must at least produce a correction and retrace about 60% of this 2019 bullish move. If down the road a complete retracement develops, then we know our present market bullish moves was a bear market rally, from an Elliott Wave perspective.
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.
Regardless of the news, this US dollar chart is still heading up. The USD bull market is keeping the gold price in check. Even though the commercials positions are heavy net short, the USD seems to ignore that. This does happen at times and can last a long time before any reversal happens.
We can see that the USD price moves are still controlled by the “Golden Cross” and the US dollar would have to crash deep before the “Death Cross” can even occur. The USD is getting support at the 200-day MA line and I see that as a bullish sign. All the gold bugs, (investors) want the USD to implode but at this time the USD refuses to play their game. Short term the odds may be stacked against the US dollar but not long term as the US dollar is in a bigger bull market than we can imagine.
The next price target would be above my wave 3 in Minor degree, which is about 97.500.
Just a quick Nasdaq update this morning as I think another major turning is near. The speed that stock bulls have returned is very impressive, and other analysts have noticed it as well. Even though the markets look bullish, they can fool us because they are just big bear market rallies.
Investors forget, don’t care or were not old enough to experience the 2007-2009 decline, but investors bought in at the peaks as well. So far it is nice to see a potential turning into another new month, which could turn February very bearish. In simple terms, bear market rallies always retrace themselves, back to the point of origin of December 2018! Any price dip below 5800 will work, but the Nasdaq will not just stop dead in its tracks, but March could end up being very bullish again. Lack of data is haunting the markets as even farmers are temporarily blinded due to back-log economic data. The problem with all that fundamental data (news) is that much of it is lagging and or manipulated.
Investors were surprised that the rate hikes may be taking a “pause”, but investors can take that as bad news, as a recession followed everytime they paused. Sure, many tech companies surged but Facebook doesn’t justify its move at all. FB developed a huge gap to the upside, and any gap has a 90% chance of getting filled. Since my Facebook account got hacked a few months back, I have started to reduce my digital footprint.
Apple has security concerns with its Facetime app and it seems that all smartphones are just spying tools.
Another bearish reason is the Gold/Nasdaq ratio. At 6.38:1 it’s an expensive ratio. This morning it was 5.25:1. There’s a long way to go down before the Nasdaq and other indices become cheap again.
Last month Apple’s stock price finished to the upside. All the dovish news about rate increases taking a break was a major surprise to investors but I said this could happen many times before as T-Bonds are in a bull market. One thing that is hard to imagine is that Apple keeps on soaring if the DJIA or SP500 heads south. There is a huge probability that an expanded bottom has been formed which seldom ever hold.
I labeled about 5 gaps with a recent gap to the upside still being open. Short term this gap will get closed, with a much bigger gap still open at the $120-$130 price level. Jumping on the Apple bandwagon after a month of bullish action, is an emotional decision, thinking we are buying on the “Dips”. Of course, my bearish outlook can be wrong and for that to happen, we must see a correction form with “No” new record lows.
Just because an asset class goes up, does not mean it’s in a bull market. If market participants get fooled by a Minor degree rally then any Intermediate degree or Primary degree rally will really fool the majority. I would be a lot more bullish on Apple’s stock price if there were records of insiders buying their own shares back. I read one story that Al Gore was a buyer, but I have to hunt up the article to confirm it. I believe the board wants to kick Al Gore of the team. If and when this happens I will shed no tears for Al Gore to be removed from his position.
Even before this rally Apple’s stock price was not dirt cheap when we compared it to gold. Today this Gold/Apple ratio sits at 7.91:1 which is better than the extreme ratio of 5.24:1.
I think the Gold/Apple ratio should get closer to 10:1 or even 15:1 before it may be a longer-term hold.
With the new moon coming on Monday, it can provide an extra push if the reversal is near. I’m sure they will get their Facetime bug fixed, but it also goes to show how easy it is to hack into this digital world. The biggest threat is Artificial Intelligence, (AI) as dictators and communist countries use AI to brainwash and control them. If you think the movie “1984” is about dystopia, then what we have today is far more powerful and insidious.
The SP500 E-Mini has just pushed to another new high for the month of January 2019. Investors and analysts are bullish while a big group is bearish as hell. My Market Vane report is ending but this week there was only 50% bulls present which I don’t see as extreme. A 50/50 reading is not extreme enough to help determine any potential great move still to come.
I see this entire January run as a bearish rally but once the government clears up the economic backlogs we don’t have any COT reports to help us. I do have the Gold/Ratios which never shut down but are always active. The Gold/Sp500 ratio was 2.03:1 this morning which it has been in a tight range since May 2018 which had the exact same reading. This expensive ratio doesn’t make me jump up and down expecting another huge bullish phase to come. Cheap is a .75:1 ratio which means we still have a long way to go before stocks become very cheap again.
The DJIA has about the same wave pattern but looks like it has peaked already. This top may not hold as Friday’s can bring some very unexpected surprises which the markets may or may not like.
The DJIA is a bit cheaper when we use gold as a measuring stick, but it is still pushing the extremes at 18.77:1 this morning. 21:1 is the record to beat which happen in August of 2018.
We are at the end of a month and this bullish phase could be just the public stuffing or topping up their contributions for the 2018 tax year.
Continue reading “DJIA And SP500 Intraday Bull Market Update”
For well over a month the DJIA has been defying gravity. We had another peak yesterday at the 28,400 price level which is also the right shoulder of an H&S pattern. That’s just one indicator that the markets are approaching bull market resistance. Technically, this 4th wave rally can handle more, as diagonal 4th waves can dip into the previous wave 2. Right now the DJIA is in the midst of a 3 wave move, but two more can develop, pushing to another record high! Gold has also soared during the same time period and this morning gold was close to $1310.
The Gold/DJIA ratio has not changed much as the DJIA is still very expensive at 18.76:1. That is better than the 21:1 ratio we did get and a far cry from the cheap readings of 7.19:1. Maybe if we are lucky more government reports will come out this Friday, Feb,1, that will include some COT reports. Since Friday would be a new month other economic reports will also come out. All this could produce some very violent moves with the cold winter blast grounding flights. Grounding planes will affect their earnings as well, which could take some time before they report.
Once it gets colder in Chicago than the Arctic, then you know it’s fricken cold out.
Looking back in time always gives us a different perspective if we take the time to actually do it. I’ve done this thousand’s of times, and each time looking for a better fit. The common question is, “How deep or low can the DJIA fall down to”? Since the 2000 peak we’ve had more forecasts of the DJIA crashing well below 1000 many times and yet this has never happened. In 2009 the markets sure dipped to a new low and well below the previous 4th wave of one lesser degree. The DJIA stopped dead in 2009, but nowhere near any previous 4th wave during the 1990’s stock mania.
The reason this has not happened is that all other wave counts are calculated as 5th wave extensions. I will stress the fact that it’s, “Impossiable” for the EWP to create 5th wave extensions lasting 2 or even 3 generations.
The 2018 peak is a Cycle degree peak which eventually has to be fully corrected before another huge bull market in stocks will start. The public will call it a bear market and the big question may be, “How deep can the DOW fall”? We have three important turning points, with the 2016 low being just one price area that we can see again. At a bare minimum, the DJIA should slip below the 14,000 price level. Longer term, any price low below 2011 lows, will get us closer to a bear market that is finishing.
This will not happen overnight as it will take as long as solar cycle #25 has not started.
The DJIA has made an impressive short term run that, at a minimum should give us another correction soon or the end of this bullish phase.
Last week Apple’s stock price recorded another bullish high and could still hit a price target of $160. The huge gap to the downside has now been filled! The question is, ” Is this rally just another bear rally or is it the real thing”?. I tend to believe that the rally that started in January, is part of an expanded 4th wave and one more move to the downside should eventually happen. If Apple turns down it may take all of February to accomplish, but when it does I will turn very bullish on Apple’s stock price once it hits my potential “A” wave in Primary degree.
The hedge funds saw this Apple crash coming and it takes only a few of them to unload billions of shares swamping buyers in the process. I’m an Apple product user but that doesn’t mean I’m permanently bullish. Earning are extremely easy to manipulate and Apple is as good as any other company that manipulates earnings. I would be far more bullish if insider buying news filled the financial news blogs, but that has not yet happened.
As more backlogged data comes out in the next few weeks, it could surprise many investors and set off another mini selling panic.
The Gold/Apple ratio is at 8.25:1 today which I still consider an expensive reading. The more shares we can buy with one Troy ounce of gold the better, but not until we establish a large database over some extreme cycles, will it make sense. The cheap Gold/Apple ratio was closer to 21:1, so we have a long way to go before that ever happens.
There is a good chance that this DJIA bullish phase is coming to an end. Investors are all waiting for some miracle to happen to give them the green light to jump on board this rally. All it takes is some more “bad news” and this market can switch by selling. Beside that many stop-loss sell orders are piled up below present levels even when we can’t see them. There aren’t too many traders that can handle a 2500+ point decline in the DJIA.
In the long run in order for this rally to be confirmed as just another bear rally, the DJIA has to decline well below the 21,700 price level. With this government shutdown, economic data is rather scarce just like with all the COT reports. About the only truths we have are the charts and those that don’t know any technical analysis are at a distinct disadvantage.
This market rally is just a Minor degree rally and many analysts are very bullish. Getting fooled by a Minor degree bullish phase will be worse once we start a potential Primary degree bear market rally.
“A” wave bottoms in Primary degree are “buy” signals and they should last a bit longer than just a few weeks. I think it’s impossible to have double expanded tops like what all wave analysts are trying to tell us. Most are looking for 5 waves down in Primary degree which has never happened in over 18 years, and it’s not going to happen this time. The reason they have never materialized is that we are nowhere near any SC or GSC degree wave counts.
The Gold/DJIA ratio is at 19:1 this morning which isn’t that far of from a record expensive ratio of 21:1. We have a long way to go before this market becomes dirt cheap again as a Cycle degree bear market will take more than a little dip to resolve.
Investors had a bit of downtime on Monday but the SP500 peaked out on Friday, January 18th. Since then the SP500 has been slowly grinding down. The entire move since late 2018 sure fits into a 3 wave move which can be just a bear market rally. On Sunday we also had a full moon which can act like a bull trap at certain times. The world sad state of affairs will not get fixed with just a short correction as it will take years to unwind the deep debt that all governments are presently in. At the 2680 price level, we also have a very tall H&S pattern being set-up which would be very bearish if the bear market rally is real.
The trend lines are there as it also looks like a rising wedge at this intraday level. Not until the SP500 crashes well below the 2580 price level, can we still be in a bigger bullish phase?
The question I always have for the stock bulls is, “Where is this bullish phase going to”? Is the “bottom in”? Is it a bottom for a return to a multi-year bull market? I’m looking for a bullish phase as well, but this is not it no matter how bearish the stock bears become. Insiders would also be buying their own shares back and I don’t mean using shareholders money to try and manipulate their own stocks. Buy-backs manipulate earnings with only a temporary effect even though they waste shareholders money. Companies that pay dividends or buy their own shares back are sending clear signals telling you, ” We have nothing better to do with investors money”.
Apple fits that description very well and once it started paying dividends under investors pressures, its innovations declined. When we read countless stories about insider buying their own shares back then we might see a potential bottom for a big bullish move. Insiders did this on a massive scale in 2008, and they do not buy on a whim, and they most certainly don’t sell on a “Whim”. A bottom with insider buying lasts much longer so if you were still bearish in March 2009 you will be left holding a wooden nickle like all the wave analysts did. Thinking back to 2009 can give most investors brain cramps as researching that far back sounds too much like work. Talking about the market peaks in 2000 would be 18 year ancient history.
Solar Cycle #24 was underway by early 2009 yet all the wave analysts ignored this fact as in 2009 they all had very bearish wave counts. The wave analysts that are still chasing 5 waves down in Primary degree are living in La-La Land as they have learned nothing in the last 18 years! Expert wave analysts are also telling us that 5th waves can extend 50 years or more which I think is impossible as 5th waves always contain the weakest fundamentals. Besides that, not a single 4th wave bottom in 1932 or 1974 have the markets ever retraced back to. The reason this has never happened is that 1932 was not a 4th wave bottom in SC degree.
2020-2021 could see the arrival of solar cycle #25 and being bearish when a solar cycle starts to crank-up will put investors right back into a bear trap much like early 2009! Solar cycle studies were in the books of EWI, yet at that time they ignored solar cycles just like they ignored insider buying.
Since there is always news about the Chinese Juan, I thought I would look up its chart on bigcharts.com. USDCNH is offshore money much like US dollars are offshore as Eurodollars. If we start back at the 2014 low we can see what looks like the start to a fantastic 5 wave impulse. The Juan’s bullish phase that ended in late 2016 sure works well as what followed was 7 wave decline. I don’t have exact dates for each bottom but many tops and bottoms happen spring and fall as well. The bottom in early 2018 produced another fairly clean set of 5 waves which can work as my first 1-2 wave set if wave 3 is going to extend. If and when we see two more sets of 1-2 wave structures then as sure as I’m typing this, a wave 3 extension will happen.
2017-2018 we now have a great looking double top which is an H&S double top as well. In a bull market, H&S patterns are extremely bullish, so I wouldn’t be thinking bearish thoughts here as the Juan still has a long bull market ahead. Unless I’m far too early with the Minor degree wave 2 bottom. We should find out in about 3-5 months as I fully expect the Juan to break out in 2019!
SPY is very popular with investors and there is lots of liquidity until buyers take a rest. Being bullish in a vertical price move that seems it doesn’t want to stop, is exhausting.
This ETF will go a bit higher than what is posted, and there is still upside that we can take. Diagonal 4th waves can soar well into any part of the previous wave 2. Triple tops at the $280 price level would be close to my maximum what I would allow. Even before SPY gets near that $280 target price we should start seeing a strong correction. The stock market sure doesn’t care about any government shutdown as it just keeps on trucking. Maybe the shock will come once the shutdown becomes history, as they will have to sort through tons of date just to catch up.
Nobody knows when the shutdown is going to end, but they believe that the stock market will soar once this trade war comes to an end. Any COT reports have not been updated and when they resume posting traders positions we could see a mini “COT Shock”. We can’t tell until it happens as it could act just like a “Flash Crash”.
This Mid-Cap ETF is also a diagonal wave as IJH has now dipped into my wave 2 in Minor degree. IJH should resume its bearish trend and if this was a fake, or bear market rally then a 100% retracement must happen.
The biggest asset manager in the world (Blackrock) says the bottom is in and we are off and running into the next big bullish phase. Of course, they always have a fundamental reason, that may derail the bull market. The world’s problems are not going to get fixed in a short correction, as it will take much longer then most of us have the patience for. We could get another zigzag decline that will look like 5 waves, or we can get an obvious zigzag that stands out like a sore thumb. Either way, a new record low will be a trigger to close off shorts positions and even look at going long.
I have a small short position with this ETF and once IJH drops below $175 it will turn my short position green. Below $156 my short position will be closed off, as sure as “shit”, a counter rally will wipe out any gains we may have at that point.
HDGE moves inversely to the SP500 but it doesn’t follow it in a perfect lock-step manner as the deep crash went deeper than expected. The only way HDGE can crash so deep into wave 2 in Minor degree is if it’s a diagonal wave structure. HDGE is now forming a double bottom with two spikes in a row. HDGE can take more downside but I see a bottom starting to develop. One more bullish leg above the $9.00 price level would work well to complete this bullish run. That will not happen today or tomorrow as it could take well into February or even March before this run completes.
After that HDGE should suffer a much bigger correction and should also take much more time completing. We would be in a Primary degree world by then and heading down to a Primary degree “B” wave. The VIX has also plunged in the same manner, so it’s not just one asset class that has displayed this bearish decline.
So far the SP500 is keeping its bullish trend while the VIX created a huge decline. I have only one trend line which the SP500 is starting to cross or roll over. Any bigger dip will help confirm that the SP500 could be losing it’s power, as buyers take a rest. Markets are just big auction sales which always gets sold to the highest bidder and I see the markets reacting the same way.
I can’t get a correction out of the VIX as it looks like 5 waves down. I’m sure the VIX will crank up again as the VIX could be on a “C” wave decline. All this might still take the rest of the week to play out, as little choppy waves stretch time. US government shutdown has killed any COT reports and once the government gets up and running again, we could get a COT “Data Shock”. My last report will be a month old by January 20th so positions could make dramatic shifts when it gets released again.
The Market Vane Report I still get is a private report, which shows that 47%-48% bulls were present all last week. There are still too many bulls around to keep fueling this bullish phase for another major leg up. Our 24 month high was 73% bulls, which is not as extreme as it can get, but enough to kill the stock bull. The basic logic is when the majority are bullish then who is left to get in. Is it a tribe that just came out of a cave or just another greater fool chasing a bull market? FOMO is a popular bull trap
The markets keep pushing higher, chopping up all the bears into hamburger meat in the process. The DJIA has already gone sideways long enough to where it has broken the bigger trend line that started in 2018. I’m showing a wedge which some even call a bullish flag. I see a wedge at this time but the DJIA can keep pushing north, but it can also suddenly reverse in a surprise bearish mood swing. Analysts will always find a reason why any asset class goes up and down but can we invest or trade with any single fundamental opinion.
Without a doubt, some analysts are very bullish when the markets are pointing up, and they become very bearish when the markets are pointing down. Only a few have the courage to be bullish when the markets make a big dip like in December of 2018. Most investors didn’t have a clue a market drop was coming in October 2018. To say that Apple didn’t see the slowdown coming is not being truthful as Tim Cook was the expert on China long before Steve Jobs passed away. Apple has a position in the DOW, so chances are slim that Apple will soar when the DJIA reverses its bullish trend.
The Gold/DJIA ratio and the Gold/Apple ratio give us a clue when an asset class becomes very expensive or cheap.
The record Gold/DJIA ratio to beat is 21:1 which happened a long time ago in August of 2018! Today we sit at 18.40:1 which still makes the DJIA expensive. Cheap would be 7:1 but that could be a pipe dream if you think it’s happening now.
I think options are due this Friday which can always cause some unwanted turmoil as well, and we will find out how committed the stock bulls really are. Usually, funds enter in January for income tax and retirement funding, and when the flow stops, stocks can make a huge plunge. When the DJIA retraces the 21,500 price level then this rally will be confirmed that it was just a small bear market rally, in Minor degree. If any Minor degree rally can trap the bulls then any Primary degree bear market rally will trap many more.
January 15, 2019
I apologize to my readers for inconsistent updates, but one of my personal email accounts has been hacked and spam mail has been flooding in for months already. The threats of blackmail demanding Bitcoin payments have intensified and have also become more vicious. I stopped into my provider’s office and showed him a printout. They also gave me an e-mail where I can send some of the worst threats to. In short, my private FaceBook Account has been hacked because the problems did not come from this blog. A friend is coming over this week and he has had the same problems including death threats. Needless to say, he had to delete his FB account which I might do as well. I have changed and increased my password strength, which is just one step I can take. It will take time to see if the spam mail slows down. Phishing emails are pretty common and I report them as well. The writing is on the wall as I think it is time to reduce my digital footprint as much as possible.
This year other things have developed that further hinder any consistent postings which I will elaborate on in the future.
Talk about going ballistic we have to look no further than this NFLX chart. What Netflix is showing is more a diagonal move than an impulse move. Since the November 2018 bottom (Wave 3). Netflix created an expanded pattern which are more common than wave analysts give credit to. Our present day move has at least three open gaps which would not get closed until NFLX hits the $270 price level. We could get another zigzag decline which could close that open gap we have back in January 2018. NFLX sure repelled from this gap, but there is still a small part of this gap open. Ideally another new record low can happen, but we must be open to a bull trap before then.
I don’t have any Gold/NFLX ratio database setup, but today we are sitting at a ratio of 3.81:1, which is only slightly cheaper then when NFLX was at $420 in June of 2018.
I will stay with the big wave structure until this wave count shows me otherwise. Fast moves like this tend to never last that long as most moves like this are just emotional moves. FOMO or unstable algorithms producing flash crashes is part of the landscape that we can’t avoid. The SP500 is starting to flatten out a bit so it’s just a matter of time before some mentally unstable algorithms start to freak-out. I’m just having a bit of fun here as algorithms are not human but very few people can tell the difference. Algorithms are created by humans just the same. Traders can’t move as fast so spikes are produced which usually develop at turnings.
The bigger the spike the bigger or longer any counter rally will last. Since the 2018 January peak, we’ve had more spikes that we can count and each one produced a reversal.
In candlestick form, you would have to count all the “Hairs”, (Wicks) and always know the price of each “hair” tip. If this rally is a bearish rally then a new low below 2040 should happen. Many analysts are very bullish at this point, but they were also bullish at every major top we’ve had so far.