The Nasdaq has been marching to a different drummer again, and in the last 5-6 trading days the Nasdaq has been in a bullish phase. I would love to see the Nasdaq break out a bit higher and as I post it seems to be doing that. Any of these inverted zigzags can turn into a running pattern, which many may call a “Truncation”. There are lots of examples out where zigzags are cut short, but I will call them a running pattern before I call any “Truncation”. There will be constant adjusting that I will be doing until the bigger trend becomes more clear. The Nasdaq peaked last month and if the bigger trend is in place, then that peak of the Nasdaq will be the high price point of 2018.(7200) No more record highs for a very long time.
In a bull market, we get consistently higher lows which are Elliott Wave, 3 wave patterns. This process works in reverse as well as a bear market will produce consistent lower lows and lower highs. Since the March peak that is exactly what the Nasdaq and others have been doing. Jawboning a bear market back into a bull market will not work, except on a short term basis. Once this present rally starts to wear thin, then we should see all the markets make new lows again.
Many are complaining about how volatile the markets have been, as they have never seen so much volatility! All I can say is “get used to it” as that is what happens when markets start to make a big trend change. Those that are already out can sit back and watch this market crash, until it becomes over sold again.
Any big forecast how deep a bear market can go is depended on what degree of a peak the markets are all at. So far they expected just a 10% correction, but now this number is changing as well. Some are now calling for a 40% correction, but a 60% correction number has also been used. All the forecasts in the world for a bear market bottom will mean nothing, if we don’t know what’s going to happen after the bear market finishes.
At a minimum the Nasdaq has to retrace the 4000 price level first, and this may only be a temporary resting spot until another leg down starts.
Bull markets end when nobody expects them to end just like bear markets will end when nobody expects them to end. This has happened so many times in financial history that it will not be any different this time. When it comes to the stock markets human emotions never change as fear, joy and greed has been around since the caveman days. A new generation of investors do not do any homework in studying financial history, and many of them didn’t even experience the bear market of 2008, so those investors are in for a big surprise.
Mark Zukerberg’s testimony increased his net worth by 3 billion dollars during the time he sat in his chair, while social media supported Zukerberg! In the long run Facebook is still besieged with problems like the majority of tech companies are having at this time.