While the majority of investors are pushing the SP500 higher, I’m building the bearish picture. Most of the bearish pictures I can draw do have multiple choices most of the time. 8 choices would be normal and constantly eliminating anything that will not fit is the name of the game.
A near vertical move with barely a correction could work well as part of a wave 1 pattern and the mainstream analysts are foaming at the mouth in how bullish this setup is. To confirm the bullish scenario the SP500 would have to continue to soar to much higher price levels, otherwise, we are being blinded by a bunch of smoke and mirrors media news.
There are lots of bearish moves just like this and most of them were fully retraced. This weekly chart has pushed the SP500 past the 50-day MA, with the 200-day MA still being far below present prices. The short story on that is that the death cross on this weekly chart is in our future as we are still under the influence of a golden cross that happened in 2009-2010.
Price wise the SP500 must crash well below any support we see and that is before the 200-day MA gets hit.
I’m sure that will happen as flogging a tired stock bull will eventually just piss it off and they could flee in all directions except up.
Commercial traders are not that skewed to the bearish side but bearish all the same. This also tells me that their positions can change rapidly which will happen once the SP500 gets into another oversold condition.
The Gold/SP500 ratio tells us another story as this morning it was 2.16:1. We are still very close to a record Gold/SP500 ratio high, so there is nothing that I would consider cheap when compared to the gold price. In order for the SP500 to become cheap again we need to go below a potential 1:1 ratio or even lower.