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.