Is the stock rally running out of steam or is it going to soar to the moon with another super leg up? Many experts say that this is just a healthy 10% correct and that this bull market will return and soar once again.
The experts see no recession on the horizon in the US markets, but in Ontario, where they voted themselves a minimum pay increase massive amounts of layoffs were announced. I doubt it very much that the USA will skirt a recession while Canadian fundamentals implode.
Fundamentals are lagging indicators, not leading indicators. It took 9 years for the fundamentals to change from horrible in late 2008 to great in early 2018. When the markets start to turn down again, you can bet that the experts will come up with all sorts of fundamental reasons why the markets are going down. The second deep plunge in February sure looks like a nice declining impulse, but in reality it counts out much better as a diagonal making it a potential 5th wave.
Today is also a new moon date, which in the past has produce some dramatic or very energetic reversals. The February double bottom will never hold if the “Dip” so far, is actually just the start of the “Big Dip” in Cycle degree. The blame game will continue as they always need a scapegoat to blame stock market losses on. It’s never about stupid investors or stupid money managers that always get into a trap, but they will blame computer trading as part of the reason. The fact is behind every computer trade is a human with an itchy finger sending Algorithms crazy.
Below todays present prices, the protective “Sell stops” are piling up, and we don’t need any fancy computer to figure that out. Traders have been brainwashed to move protective stops up, which will easily get triggered once the “Big Dip” resumes. “Big Dip” I mean a Cycle degree 4th wave dip, not some pussy Minor degree correction that we are presently in.
They had a “Big Dip” from 1929 to 1932 as well, which was a Supercycle degree dip. That only took 3 years to play out. I’m sure any Cycle degree “dip” will not take any longer. In the long run solar cycle #25 will put a screeching halt to any bearish wave counts or bearish fundamentals that we can dream up. Solar Cycle #24 also destroyed all the bears by early 2009, so never underestimate the power of the sun on human affairs on earth.
The Gold/SP500 ratio has been hitting 2:1 on the expensive side from a (.75:1) ratio on the cheap side. When the bearish mood returns, then this 2:1 ratio will never be exceeded for many years.