The SP500 has been dragging its feet and really has gone nowhere fast.
The media constantly talks about a recession but the markets are still sitting at record highs.
You would figure prices of the indices would be sliced in halve buy now, but they are not.
Any Tweet by Trump could get investors running for cash as we still have 2.5 months of time left when markets take the time to crash.
October, 24,1929 would be a 90-year anniversary date.
The index only moves during the day with some of the wild moves smooth out a bit more.
The recent bullish price surge is getting down to the wire as there is very little room left before the SP500 breaks out to new record highs.
There is also an open gap which should get closed off, but ultimately this wave count has to decline and take out multiple support price levels around the 2830 price level.
They keep talking about a recession but this chart is still at record highs. Record lows would be better as when that happens we know the recession will be over. 2008 was a good recession year reflected by the charts with massive insider buying.
If, we don’t get a significant correction by the time solar cycle 25 is in full force a new bull market should start.
Upswings in solar cycles are very bullish for stocks which could happen by early 2021. In the next few months, this SP500 would have a long way to go as it has to clear the bottom of my “A” in Intermediate degree.
The Gold/SP500 ratio is sitting at record highs at 1.96 just off the 2:1 expensive ratio I have recorded.
The markets took a “Big” dip since last week and many experts are talking about buying the “Dip”! Sure it looks like an impressive dip but I believe the bears still want to shred some more stock bulls. So far, we are in a counter-rally which may be a wave 2 in Minor degree.
Buying the “Dip” for what? Another bull market or are we just in another bear market counter rally? I don’t think this market will let the stock bulls off so easily as this was just a wake-up call for what’s to come.
There is no real support just yet as the SP500 should fall below the June 2019 low. 2750 could supply support but the big support range is 2350!
We are at a Cycle degree top and Cycle degree corrections are not over in just a few days of crashing prices. Besides that, solar cycle 24 is here, which could still last a year or so. My bet is that this top is the last record high for the year so this might go on until we hit the lowest point of the year.
If stocks have yet another major move up then, to put it bluntly, Gold and gold stocks would crash.
The Gold/SP500 ratio is 1.94 which still has a long way to go before this market is really cheap when using the gold cash price.
The SP500 had a peak on the 29th before it started to back off and start yet another decline or correction. I see them as diagonal waves with the last (c) wave looking like a small ending diagonal. The SP500 definitely would have to fall much deeper if a bigger bear market is coming.
Back in early July we still have a small open gap and the very least, that gap should get filled. Commercial traders positions do not support a super bearish picture at least not just yet.
After a small break, search engine attacks have started up again, which slows down the entire blog. The majority of search engines attacks came from Hong Kong and China and “they” have now switched to attacking this site from Singapore. In the long run, no web site can stand up to these kinds of attacks and I will only mention it once in this post so legitimate readers are informed.
At this time my last record high was July 15, 2019, at the 3026 price level. What followed is a very choppy decline that can fool anyone into thinking that stocks are just in a correction.
Analysts that are looking for any price support target are still on the bullish side. Well, bear markets start out exactly like that but they also can smooth out as any bearish phase keeps on growing.
Any bear market has a starting point far removed from the consensus vote of a 20% decline. I think a cycle degree bear market will produce a far bigger downside move and investors could end up running to the hills looking for gold and silver.
This could take until next week before a new leg down can happen and once investors show “Red” they could run to a safe haven in the “Yellow” metal. We can’t forget silver as it’s still acting very bullish even after a near vertical move.
Lower highs are the signs of a bearish decline and until the decline can be easily seen this market could soar to another record high! The odds of a new record high decrease every day and can establish the last high of the year.
2020 elections will be a big part of it as parties crank up the rhetoric.
The president that wins in 2020 will have the sun at his back which is about as bullish of a scenario that I can see.
I am very bearish on the 4-5 main indices that cover but very bullish on gold&silver.
Will the SP500 create a new record high for 2019? Many are betting on it but a new record low will certainly put a lot of doubt and fear into the mix. If the markets are on the bearish side already then there is no way the trend line will hold.
Sooner or later the record high for the Mini SP500 will be in, if it hasn’t already done so, July 15th at the 3023 price level.
A new record high could come but at this time its a flip of the coin when a substantial bearish move starts to take place.
In the end, it will boil down to the US elections and who gets into power. Election campaigning is in full swing and if President Trump is set to lose then the markets can turn into a massive “Sell-Off”.
Inauguration in January 2021 is when the new president and his crew take control and after that, the markets could soar again.
This all coincides very well with the solar cycles as the new president in 2021 will have solar Cycle 25 at his back! Until then solar cycle 24 and solar cycle 25 will mix with solar cycle 24 eventually disappearing never to be seen again.
The Gold/SP500 ratio is about as expensive as I have seen it at 2.1. It takes 2.1 gold ounces to buy one unit of the SP500 and we need that number to compress in the months and years ahead. Record cheap is when it only takes .75 of a Troy gold ounce to buy a unit of the SP500.
I moved my wave 3 extension back down so now it’s the 5th wave I’m extending. Since the 2007 peak, the markets are in the process of finishing wave 3 positions each declining by one degree. 2007 was a Primary degree, 2015 is an Intermediate degree, 2018 being a wave 3 peak in Minor degree.
As I run out of degrees then Cycle degree wave 3 should be next to complete. The peaks will become one degree larger degree wise. SC degree wave 3 will peak in our future peak and not in our present, yet the majority of wave analysts are still trying to force GSC degree wave 3 onto the 2000 peak! Sorry folks, markets do not have multigenerational 5th wave extensions as they are technical the weakest.
This markets can jerk around frustrating us to no end, but another correction is due that can send investors running to the hills once again.
Since late last week, the SP500 has been in a bearish funk waiting for some fundamental news that will send stocks soaring again. The SP500 is sitting on the 200-MA line so when that support is not strong enough, them more downside is sure to come.
At 2969 this market has a major roadblock to contend with in the shape of a triple top and a couple of H&S dips.
The SP500 needs to keep going south before another death cross kicks in. I’m guilty of leaving the 5th wave uncapped due to lack of room.
Leaving any 5th wave uncapped must not happen as it tells all readers that the wave count is terminated, worse yet it shows we have no confidence in our wave counts.
In the long run, the entire June bull run will get retraced once the SP500 falls below 2740. We also have to be aware that another correction will complete before then.
The Gold/SP500 ratio is at 2.08 from a high of 2.41, so I still consider that very expensive.
One thing to watch for is how gold is going to react while stocks are heading down. Running into a safe-haven like gold is an emotional decision, and can work against us. As soon as any counter rally or bigger bullish run comes along, those gold investors will start to run like chickens as the stock market is very strong competition for gold.
Solar cycles are the real fundamentals as they produce the bullish business cycles like what happened in early 2009.
Younger investors should track the solar cycles as they also drive all commodity prices. The 2020 elections will happen at the bottom of solar cycle 24 so I’m sure there is lots of room for any turmoil to strike fear into the hearts of investors.
The markets continued with their relentless bullish advance last week and so far investors in June see no fundamentals to dull their enthusiasm for stocks.
Markets are always full of surprises but I’m sure an upside breakout is what is expected. The problem is that we are sitting at a triple top at the 2970 price level and we have two obvious H&S patterns as well. In a very bullish scenario that right shoulder would blow its top and the bullish advance would “keep on trucking”.
If investors are just chasing the trend to get back on the bullish bandwagon, then the weak players could be the first to run like chickens screaming the “Sky is falling”.
They don’t even have to run away as a smart algorithm will do it for you. At 2940 the markets would hit another small triple bottom so once it crashes below that, we have a good chance a bigger or longer bearish phase has started.
Of course, a stock crash or “correction” below the 2320 price level brings out all the bearish fundamental news that you can never read because you would be swamped with the amount of bearish news. If they declare their 20% bear market drop has arrived chances are good another bullish phase would start again.
Markets never do what the majority want as that would be simple and to easy.
The commercial hedgers offer no special insight as they are net short by only a small amount.
SP500 soared last week but so has gold, if gold and stocks can soar together they can also plunge together as they did in 2008.
The 2020 elections might seem far away but without a doubt, the public is getting brainwashed by the big political parties already.
My little moon app tells me that we are also at a full moon which can be very bearish at times. The problem with using the moon cycles is that they are not that reliable as some make them out to be. At times major reversals have occurred during the full moon, but so have new moons.
The next new moon should be July 3, 2019, still a few weeks away. Sometimes midweek will supply a turning in the stock markets so a reversal could still take a few days.
I would love to count down 5 waves in Minute degree but this wave structure just doesn’t fit a wave 2 rally, as I would like to see the SP500 initially go a bit deeper. Otherwise, we would need some wild extensions for this impending 5 wave run in Minute degree.
Commercial hedgers net short positions hardly show up, which is still fairly bullish from my perspective. I’ll give this bullish run until the end of the week where this strong bullish trend faces a correction or an end to this bullish phase. If this June bull run is just a big bear market rally then eventually the SP500 would have to retrace the 2730 price level.
The Gold/SP500 ratio has not changed that much and it’s still at the 2.16:1 range which is still far too expensive, as gold ratios go.
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?
Finally, the DOW had another price failure and is now pushing into new bearish territory. I’m sure it’s just a matter of time before investors start a mini panic. A mini panic is when a group of people all “See” the same situation and start to act at the same. Most of the time they “Panic” at the wrong time which usually turns into a short term buying opportunity.
The Mini DJIA sure had a wild counter-rally in May which now has completely retraced itself. The media turns bullish while the pattern suggests that just a mini bear market rally has occurred.
The SP500 has about the same pattern, while the Nasdaq displayed a much better flowing 4th and 5th wave. It may take until June for this last part to play out but either way, my 5 wave run in Minor degree, will have to come to an end.
Another Intermediate degree is next on the list and even that may not be any bigger physically, than what we are looking at right now.
The trade war continues but now it’s all about Rare Earth Elements and the Energy Metals.
Between the five indices cover none of them have the exact same wave count. They are all different and I have to try different short term wave counts as well.
Right now I see a declining diagonal pattern about 7 days old, which could give us a surprise price rally. There is no price support worth mentioning because most price support forecasts never hold before the digital ink even drys. Longer term I’m bearish and it’s not rocket science to dig up a reason why!
The trade war is on everyone’s lips and it will not be over anytime soon. Of course, the President thinks he can keep “Tweeting” trying to keep the markets afloat. Sooner or later the “Tweets” no longer will have the same effect as investors will get bored with them.
The SP500 is not loaded down with as many tech-related companies, but the Nasdaq sure is. I will post the Nasdaq as its chart is close to short-term support.
Between the 5 indices, I generally watch, each one has a slightly different pattern and in the case of the SP500, I have one small zigzag that doesn’t fit as well as I would like.
At the 2895 price level, we have several previous 4th wave peaks which also have some spikes in them. Draw a line across the 2895 price level and we also have an H&S pattern which could also be very bearish. In a bull market that right shoulder would never hold but when investors are in a bearish mood, that right shoulder will just keep on crashing.
It’s a full moon today so next week could end up being a wild ride indeed. What else is new? I would rather see some fast action than when the markets are in a sideways pattern.
Either way longer term I’m bearish, but nothing can stop a wild counter rally when we least expect them. A Minor degree wave 1-2 can work but a surprise rally produced by a stock bull attack sure can create a ruckus.
The commercials are not that bearish so this leaves it wide open for moves in both directions.
The Gold/SP500 ratio is at 2.26:1 and it’s been hitting this 2:1 ratio brick wall since May 2018. Longer term we may end up close to a 1:1 ratio but it will take a long time to get there.
Market activity during night hours may be dominated by traders from around the world as local investors may just be waking up. The big boys who bring us new IPOs try to time them for the peak of a bullish cycle. Flooding the markets with IPO’s is a sign of a major top as stocks like LYFT, and UBER fail to make investors happy.
I’m sure we have started a 5 wave sequence and for now, I will be looking for a Minor degree 5 wave run. Of course, any run like this doesn’t last that long as being out by just one degree will produce “Surprise” counter-rallies that would move outside of the two trend lines.
The goal is a potential “A” wave in Primary degree as that would also give us a short term buy signal. Any “B” wave could be very small but might drag out a few months or so.
Folks, we are heading into new territory and any corrective wave count I can come up with, may not last very long at all.
In the last year or so of solar cycles, markets tend to crash but a few times this has not happened like in 1996.
At this time the SP500 produced a 7 month double top before it started to decline. So far the SP500 is forming the best and when this impending 5 wave decline moves dramatically out of character then I will look at building my alternate wave counts. I don’t think we are near any Minor degree move just yet, but if it lasts all of May, I would consider that pretty lucky.
We are looking at a possible Cycle degree correction which will take longer and a few more years to play out.
All this bearish market action based on a tweet from President Trump! How does an ordinary person compete with people that are trying to manipulate the markets?
Over 1.5 Trillion dollars were wiped off the books on President Trump’s tweets and it seems it’s not stopping anytime soon.
Last night the SP500 imploded, creating a huge open gap in its wake. The big question is, “When will the gap get fill”? If I was very bullish then chances are good that this gap will get filled this month but if a bigger bearish picture is emerging then this gap could stay open for many years. For now, I think the gap will remain open but not all indices produced open gaps.
We have many different tops with the SP500 at the 2960 price level producing a great looking double top as well. If the gap stays open by the end of this week then the gap could hang around for a long time. The gap will become important far into the future, but then the majority will have forgotten about it as well.
The Trump tweets caused this gap as at the same time the VIX exploded. Just goes to show how Social Media can damage a so-called bull market.
Social Media is “Mob Rule”, as emotional investors decided to unload after the tweeting action of a President!
What this move did show is that the Gold/SP500 ratio hit 2.3:1 this morning which is the second most expensive Gold/SP500 ratio since September 2018.
This is the weekly chart of the June SP500 contract. Our present 2019 stock rally is about 43 points from breaking out but even it stays at the peak today, I will try my extended wave count.
It was the 2011 bottom that is important as it matched the “Peak Gold Mania” of 2011 as well. The other big event that happened at that time was that solar cycle 24 hit its first peak in September 2011.
Basically, I extended the Minor degree part which makes the 2015-2016 correction a wave 3-4 bear market. Since then this market just doesn’t want to stop, but I think resistance is building up. In the last 15-16 months, we are looking at a potential triple top.
The present top also could produce a “Right Shoulder” which if the SP500 is very bearish, the markets will not blast to another record high.
The hedgers are no help at all as the commercials only have a very small net short position.
On a daily chart, the SP500 is still in a golden cross position, but a good correction can produce a death cross with little effort.
The 4th wave bottom support in late December 2018 is also where the 200-day MA is sitting. In order for the SP500 to hit the 200-day MA again, the entire 2019 bull market must eventually be completely retraced. That would put the SP500 below the 2300 price level.
I use the Gold/SP500 ratio and it is always a good idea to make calculations when the markets approach record highs. The record expensive ratio was 2.41:1, with today’s calculation coming in at 2.28:1.
The market bottomed in December of 2018 and has now been in a bull run that is a bit more than 3 months old. 2940 represents the potential for a huge double top, and a major Head&Shoulder pattern as well.
We have about 60 points to go before the SP500 runs into new record highs. This remains to be seen, in the days or weeks ahead of us. The entire 2019 market rally is very straight with no real corrections in it.
The corrections we did get are diagonal waves and could be an ending to a “C” wave. Now is also a good time to calculate a Gold/SP500 ratio which means little, if we have no database to work with. Not too many take the time to make a few calculations per month, or when faced another potential extreme.
Since September 2018 any 2:41:1 ratio would be expensive when using the gold cash price, this morning the Gold/SP500 ratio was 2.24:1. This is not a record but very close to being very expensive. A cheap Gold/SP500 ratio would be closer to .75:1
Just with those numbers alone, It’s hard to justify looking for another superbull stock market to materialize.
The Golden Cross happen at the 2760 price level which is very bullish, but always lagging in time. This doesn’t mean that the golded cross will last as the markets can reverse just as easily.
The first Friday of every month jobs report and a full moon could produce another turning so anything can still happen in the short term.
This is the June 2019 contract and the next one will not be until September 2019. The March contract has expired. Right now this pattern fits well with the Nasdaq but the DJIA is marching to a different drum beat as its correction is far from clean.
The big question will be, “Is it just a correction” (Dip) or will it take out (Retrace) the entire bullish move of 2019 ? A bearish move below the 2320 price level would be a complete retracement and help confirm that this bullish mood was just a big bear market rally. The 2790 price level seems to have importance as the SP500 has wobbled around that number 4 times already.
Of course, if the stock bears are just taking a coffee break before the next attack, then this 2790 price will never hold. Right now we also have another small H&S being set up.
The commercials are net short the SP500 but not by that much. This could make things pretty volatile at least in the short term. Until this market gives us a decent looking correction I will remain bullish, even though the markets could still go higher.
This planet is suffering from a massive overdose of debt and corruption that is not going to get fixed this year, or next year, or the next! 🙂 Solar cycle #25 will come to the rescue, but that might not happen until late 2020!
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.
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.
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”
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.
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
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.
The rally I was working has traveled further than what I would like to see, which makes the unthinkable of a new record high a real possibility. This January rally being a small degree was enough to force a review starting back at the 2009 bear market bottom. In this case, I looked at extending wave 3 in Intermediate degree. I’m sure this market rally has something to do with investors trying to top off their retirement accounts. That December 26th bottom left a big spike behind, which is one big clue that this bottom can hold for longer than the bears anticipate.
From the September 2018 peak to the December bottom we also have a pretty good looking zigzag at this time. Any zigzag can get completely retraced but that could now take all of January to accomplish. A run back up to the 2800 price level, could happen as this rally still seems to have more power behind it. The key will be that on the intraday scale higher corrective lows keep forming.
This 2018 peak will need more work, as the September peak can turn into a wave 3 as well. The Gold/SP500 ratio is about as expensive as I have seen so there is nothing cheap about this market just yet. Today we are at a 2:1 ratio with the record being about 2.41:1. The cheap Gold/SP500 ratio is about .75:1, so there is a long way to go before this SP500 becomes cheap again when we compared the SP500 to the price of gold.
I have not been able to update as much as I would like and it may not get any better at this time. I have some serious issues I have to deal with which cannot be resolved this spring or even this summer, so my postings will be far less than what I would like to post.
The debate about what degree level we are in continues, as the majority of wave analysts all have different wave positions. The Elliott Wave Principle is not what you think you are seeing, but it’s what you visualize what the idealized pattern is supposed to look like. Every major wave analyst has 5th wave extensions when in fact wave 3 does most of extending in the stock markets. About 5 years ago I switched to looking at the markets from a Cycle degree perspective because I also tried GSC and SC degree for many years.
The 2000 peak is an Intermediate degree peak while the majority have the 2000 peak as a GSC peak or SC peak. An intermediate degree is a minimum of 4-degree levels lower than every major wave analysts has today. Most wave counts published today are nothing but a “Dog and Pony” show or a great “Smoke and Mirror” magic act. Elliott Wave is not about flipping numbers and letters around like we are flipping hamburgers, but it’s more like being a surgeon where you must think out any moves with great care.
Every number and letter also represents time, so when I see switches being made between a GSC and SC degree wave count we can jump 50-100 years into the future without realizing it. Cycle degree is basically jumping back in time which puts any SC, GSC and Submillennium degree in our future. The 2000-2002 decline took about 30 months while the 2008 decline only took about 17 months. That’s a big difference and is mainly due to the type of corrective pattern we get.
Before we ever get there this market has to suffer through a bear market for a few years before a new major bull market will start. This may take until 2020 or after the US elections before the markets start to crank up again. Every major bull market peak for the next 100 years will terminate with a wave 3 position and since Cycle degree wave 3 is used, the next major peak will be wave 3 in SC degree.
Our present bearish phase can still last into the spring of 2019, after which we should see a rally in stocks that will convince the majority that the bull is back.
This is the March 2019 contract where every trader has to move to sooner or later. Support has now failed as the Fed has threatened more rate hikes in 2019. I find this very strange at this time as many asset classes are already crashing and liquidity is draining the life-blood out of the economy. Nobody is lining up to borrow more money and gold is not going to soar to the moon. Gold sure didn’t like the rate hike, which I will update later this week. In the end the Fed has executed the perfect stock market bull trap. The majority all believe that just a simple 10% correction was coming, but they under estimating the size or degree of this impending correction. They won’t call it a correction much longer as every hope for support will get dashed.
I might add a few more of these intraday charts on this page as the days of seeing sets of 1-2 waves is going to come to an end. Wave 3 will come to an end and the degrees will start to get higher each time a run of 5 completes. This is a wave three extension in progress but heading down. In bull markets the entire wave structures are reversed.
Only 49% are bullish towards the SP500 Market Vane Report, which is not extreme just yet. The Death Cross on the daily SP500 chart happened at the 2770 price level, with the Gold/SP500 ratio sitting at a perfect 2:1. It takes 2 gold Troy ounces to buy one unit of the SP500.
Besides all these negative indicators the commercial hedgers are still net short by a good amount.
It will take far more downside to get the commercials to change direction. Even then there is no guarantee that commercial hedgers will pile into long positions.
A few days ago some analysts have declared that a bottom was in. They were very bullish but this chart would have to soar soon for the stock bulls to be in control. I doubt anybody is in control right now but once this E-Mini SP500 chart breaks below the 2590 price level then we know that the bears are in control. Those reporters that are still super bullish are going to find out the hard way which direction this market is going to head.
Commercial traders are net short, but not at any real extreme just yet. There is a slim chance this 5 wave pattern I’m working, will finish by the end of this year. It may take until February or even March to clear up. We know that January can be a critical month but March has also produced some amazing reversals. The Gold/Sp500 ratio is 2.13:1 which is still off the charts for being expensive.
Some asset classes are in a funk as some investors are still undecided. It could take very little to get a herd into a panic.