Instead of a Santa rally, the markets gave the worst Chrismas performance ever. It broke some records. I look at this during the holidays and had a sneaky suspicion a counter rally may happen. Sure enough, the markets have roared back from the dead and made up of the price it lost last week. Nobody calls the December decline as deflation, but that is exactly what it is. The USD can now buy more stocks than what it could all year. Sure we can see some more upside but a good correction should happen as well. Right now, I bet we are in a Minute degree wave 4 rally that still may flop around before it resumes its bearish phase.
To confirm that this is just a mini bear market rally the DJIA has to retrace the entire move below the point of origin, which is wave 3 in Minute degree. The big bear is far from finished as we are coming off the biggest stock bubble/mania in financial history. This is my third bear market I have tracked in the last 18 years and each bear market will be different. We are not going to get anything like the 2002 bear market and it will be different than the 2007-2009 bear market. I searched the internet for most of December and there is not a single wave analyst out today has recognized a 2018 expanded top. One of the most important markets moves there are and the experts don’t see it.
Once the bigger bearish phase resumes we should start running into wave 3 and 4 in Minor degree after which we could be approaching the “A” wave bottom in Primary degree. Any Minor degree 4th wave can contain a triangle as a triangle always forces a move into one higher degree, sometimes 2 higher degree levels. When that happens I assure you I will turn bullish on stocks.
Oil has also reacted tonight and only time will tell if it has legs to move much higher on this trip. One good thing about watching the markets during night trading is that you know all other ETF related asset class will roar in early trading sessions.