Late last night the SP500 started to top out after achieving another record high at 2878. Every top could be the last top, but we never have insurances of that until it happens. When the new trend slices through my bottom trend line by a wide margin, then we may have a correction bigger than what the majority expect. A deep dip past the 2650 price level would be a big help in locking in the new record high. Until that happens, we can always get a fast moving counter rally that would trash any bearish mood rather quickly.
What will happen is that this entire bull market that started in early 2009 will end, followed by a Cycle degree 4th wave bear market.
I have looked at 3-5 expert wave counts recently and they are about as bullish as they can make them. Building a wave count that is in sympathy with the crowd will never work. The markets will always do the opposite of what the herd thinks it’s supposed to do. Since 2000 every major peak was followed by a crash.
It seems that the higher this market is going the higher degree levels they will start to make. This is the furthest from reality in what happens in extensions, as it is the smaller degree levels that come out from years of hiding. Look what happened after the 1987 stock market crash, which produced a Minor degree 5th wave extension, lasting 13 years. All the wave counting in the world will not help if we are not prepared for what’s to come. It will be worse when this market does hit the next major bottom, because I’m sure wave analysts will be calling for the SP500 to fall to 500 or some other ridiculous number like SP500 300. Investors will be ill prepared if the SP500 stops at 700 or 750 and then soars to 3400 by 2029.
Contrarians do a far better job in reading the markets than any wave analysts can, so if they have tricks of the trade, then I want to use them as well. In late 2008 Steven Jon Kaplan was forecasting the biggest bull market since the depression, yet expert wave analysts were calling for a wave 1 in Primary degree at that time. A wave 1 bottom in Primary degree is about as bearish as a wave count, that we can ever have, so when it turned, wave followers were left holding a bag of wooden nickels. Nothing has changed as they are still pushing the unconfirmed SC and GSC degree wave counts. Make a few cosmetic changes, and they come up with a “New and Improved” wave count. Sorry folks, but cosmetic wave counting never works because once it fails, we have to do it all over again, starting with the 1929 peak.
Sure, I practice some “Cosmetic wave counting”, at the intraday level, but for the last 5 years I have not had to change any of the three tops starting with 2000!