The SP500 created a double bottom in February before it rose in a violent fashion ending on the upside last week. At this time I’m going to count this as a 1-2 and then another 1-2 count, which would mean a longer wave 3 count. All we need is one more 1-2 wave structure to complete, then we would certainly be getting a long wave 3. It can all fall apart very quickly, but the main idea is to eliminate wave counts as soon as possible.
This great looking double bottom should not hold if we are over into the big bear market side already. ( The Big Dip) Fundamentals have not really changed, but that has always been the case as fundamentals are lagging indicators, not leading indicators. It took well over 8 years for those horrible fundamentals in 2009 to change to better fundamentals by 2018. At the extremes, fundamentals will always tell us the wrong things, just like they did in 1987, 2000, 2007 and now in early 2018. Rate increases might be enough bad fundamentals to push this market down, but other fundamental reasons may appear at anytime.
EWI is also bragging that they they have hit the top, which they seemed to be pretty good at doing. Creating a great short trade setup can only benefit a very small percentage of traders, but they seemed to miss more bull markets than we can shake a stick at. Missing any major bull market is unacceptable as the older we get, the fewer bull markets we can afford to miss.
Steven Jon Kaplan started to call for a bull market back in late 2008 already, as the VIX peaked and insider buying reports were flooding the mainstream news sites. This is when the stock bulls should have been screaming, “buy”, but sadly enough all the wave analysts were bearish just like the majority were.
I’m sure this same setup will happen again and all the wave followers will miss another 8 year bull market. From 2009 to January 2018 the SP500 gained about 430%, which was only an Intermediate degree 5 wave run. The next bull market will be a 5 wave run in Primary degree, which I’m sure will give participants, 500% or more gains, in another 8 year bull market.
All the fancy wave counting in the world is pretty useless if we keep missing bull markets. We are still some time away from a real, meaningful bottom as a simple 10% correction will not do it. Even a 50% correction will not do it, as that would only suggest a move back to the average.
When solar cycle #25 arrives, then you no longer should be in any bearish positions, as our sun makes or breaks all bull and bear market cycles. The sun overrides the power of the wave counts at anytime, and it will be no different when solar cycle #25 starts.