One of the most powerful patterns that we can find is what they call a “Wedge” in conventional technical analysis. A wedge can have a rising bottom and a falling top which eventually compresses the chart after which it has no choice but to explode and then soar. The earliest we may have spotted this wedge , and take advantage of it, is in late 2008. Sure, it’s all in hindsight, but unless we know what a wedge is we will never look for them in the first place.
For many years I have grappled with the 2000-2002 decline as it looked so much like an impulse, but this impulse did not fit anywhere. Maybe because it was not an impulse, but part of a triangle decline, ending with a running “E” wave. Running flats are common, and even zigzags do contain shortened “C” wave. I don’t like to call waves “truncated” as that is an excuse to not count anything. From my perspective the DJIA from 1937 to 1942, contained a wedge that forecast the huge Cycle degree wave 3 which may have ended March, 13, 2018. I also have several large scale wedges that all indicate a huge bull market will come in the future. Sure, I can change the wave count, but in the end this wedge will remain for all of financial history.
I only use parallel lines and I use the top rising trend as my base, then I create the same angle from the record bottom of early 2009. The top trend line contains 5 waves up in Intermediate degree, so when the Nasdaq crashes and takes out the bottom trend line I also will be moving by a minimum of one degree. Cutting the bottom trend line I would also be finishing a potential Intermediate degree correction. The 4000 price level is not deep enough, if we need a 3 wave, Primary degree correction.
The gullible are brainwashed to buy on the dips and last month saw another huge one week share buying madness!
Investors just pumped the most money ever into stock funds for 1 week
You have to ask, “Buying on the dips for what?” Once a new low has been established, then all those “Dip” buyers will start to lose their capital base. All present dip buyers clearly tell us that they think that they are in a bull market. They think that another huge bear market will never come as that is old ancient history. The majority of investors never take the time to do historical research and most of them believe the brainwashing going on at market peaks.
The majority of all wave analysts have been brainwashed into believing this SC and GSC myth, but since the 2000 peaks this has never been confirmed by anyone. Since the dotcom bust in 2000, there has “Never” been a set of 5 declining waves in Primary degree. Only the Nasdaq looks like it has a set, and it doesn’t fit into any zigzag.
The Nasdaq hit a 2018 high of about 7200, and this is also the time I look for the highest peak of the year. The short version is that investors will not benefit from buying on the dips this year, and it may take over ten years before they ever break even again. They may have to wait until the “Roaring 2020s” arrive.