I’m showing a Minor degree “AB” wave with the “B” wave ending just before the end of February. This was also a full moon date and the news about the president Trumps war on cheap imports, became front blog page news. They couldn’t find a fundamental reason why the markets should crash as all the fundamentals were still bullish. They sure have their fundamental reasoning now!
Fundamentals are lagging indicators not leading, indicators so any bearish news would pick up the declines intensity. This “B” wave that I labeled, would belong to a set of diagonal 5 waves down in Intermediate degree, which can only work if this Cycle degree crash turns into a zigzag. I may run this for the month of March, or until it gets trashed, whichever comes first.
The recent talk about steel and aluminum import duties that president Trump has started, has brought this to the front pages. This has all happened before folks. The Smoot-Hawley Tariff Act of June, 17, 1930 was the last time a tariff war was conducted and it was one of the main causes of the 1929 crash and 193o-1932 bear market decline. At that time the markets gyrated everytime the Tariff Act was discussed in Congress, which was well documented in the book on “How The World Works” by Jude Wanniski.
Will this all produce a “depression”? I say “no” because in order for that to happen the US dollar needs to charge up into a major bullish phase and all stocks “and” commodities would have to crash down together! All prices must get cheaper as the US dollar would increase in purchasing power.
With Jerome Powell indicating that three rate increases are still coming this year, this combination of bad fundamental news was enough to give the kiss of death to a bull market. Sometimes I use the 30 and 90 day simple moving averages on 90 minute charts which gives you many “Death and Golden Crosses”.
With a 30-90 day setting, we can see the Death Cross happening much sooner than when we use any 50-200 day SMA. There was one Golden Cross last month, and in March we now have another Death Cross! Of course, this all becomes unreliable if I make any changes in any of my settings. Right now the SP500 is approaching the 30 day SMA, which could produce some resistance. With a 50-200 SMA my search for Death Crosses on daily charts has been largely a futile effort. I think if they showed up more often the mainstream analysts will notice them and report them.