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 SPY ETF is one of the most popular single ETFs that traders and investors use. Last week we had well over $70 billion traded in just one single day, so when the SPY heads down you can bet there is going to be insane volumes show up. The real top was in January 2018, not 8 months later that the majority use. An expanded top is not some rare top as they do happen at smaller scales. Most wave counters ignore expanded patterns, but I try not to. Some peaks are impossible to sort out in the beginning, but we should get 5 waves own in Minor degree.
What we had last week is just a little wake-up call, and once investors see the SPY to continue to crash, they will no longer be as eager to but SPY ETF stock! The $250 price level may give us temporary support but that should not hold in the long run.
Hopefully, we can find that “A” wave bottom in Primary degree, as that would give investors a better support base to work with. Again, if those analysts are calling to buy on the “dips” then those analysts have no clue how deep this bear market will eventually get. No wimpy 10%, 20% or even 40% correction is going to do the trick, as that will never make a dent into this leveraged world.
Real estate is the most over leverage asset class you can imagine, and it is even worse than the leverage with any 100-ounce gold futures contract. Give this big bearish phase 3-4 years to play out, but watch for the ending of solar cycle #24, and the start of solar cycle #25, as that will produce the next bull market.
The last thing we should do is to remain bearish when solar cycle #25 starts to poke through the northern hemisphere on the sun. No trend lasts forever including bear markets, but if you’re not following the solar cycles now then, you will gain no confidence, once 2008 like bottom arrives again. Solar cycle #24 produced this bull market and 2022 should get us close to another exact same set-up!
SPY is a main popular ETF that tracks the SP500 index. We can get an alternate look at this bearish phase which has not recorded a new high since the January peak. Just by eye balling this potential wave 1-2 decline we can roughly judge that the 2016 low will never hold. Add on an extended wave 3 and an extended wave 5 and this wave count would go below the bottom of the chart above. (180). Now if a long skinny spike were to develop then the entire structure could turn into an Intermediate degree zigzag crash. In 2016 Brexit fears dominated and the big crash was forecast on all the blogs, yet SPY turned and roared with a gain of 159% in just two years. Of course nobody can capture that move, as the planet is killing each other just for a 2-3 % return. This market should lose 2/3rds of its price in the next 3 years. This may sound depressing to most, but investors should chear when the end does arrive.
One thing I will boast about is that Elliottwave5.com is dedicated to all the Cycle degree wave structures ,which is the only blog of its kind on the Internet. With out a doubt, this blog has the most Cycle degree related wave counts anywhere.