So far the stock rally has performed in the last part of November, but that doesn’t mean it can’t stop on a dime and reverse. So far the counter-rally was a little more dynamic than what I expected but it will still fit as a bear market rally. This year we have had about 5 bottoms at various price levels, and if the bigger bearish picture is real then there is no chance that any of these bottom prices will hold. Prices rarely ever hold for very long but a good wave count bottom can.
Sure we could see this move turn into a year-end bullish party and we have to wait and see if this becomes the case. The Gold/SP500 ratio is about 2.25:1 this morning which is still about as expensive that we can get. One ounce of gold can only buy 2.25 units of the SP500, so we want that number to spread as stocks become cheaper. Just because they did get a bit cheaper doesn’t mean a bull market can keep it going. Another super leg up is pretty hard for me to accept as nothing is oversold from my Cycle degree perspective.
I applied the 50-200-day MA lines to this daily chart when the 50-day MA is going to cross the 200-day MA, which they call a “Death Cross”. Investors should never ignore these crossings but I know most of them to do, as they are fundamental analysts first. The 50-day MA can now supply resistance, so combine that with the “Death Cross”, we have a very bearish situation going into 2019.