Earlier today around noon, I began to get worried that the rally we were witnessing was a sucker’s rally because instead of the “gap and go” that I was expecting, the rally only went up in 3 waves and then began to get lethargic. And furthermore, Bitcoin’s rally came to a special place and stopped. I posted a bearish count and target in case the rally failed (here), and lo and behold, we did get quite a magnificent failure. So far so good.
But now I still have some lingering issues that I cannot yet resolve:
- Why are both Bitcoin and $JNK above their January 10th lows while the S&P is now far below its?
- Why has oil been rallying this whole time while the S&P has been falling? Is it one of the greatest predictors of serious market downturns, or not? Is all that smart money that flows in oil suddenly stupid?
- Aren’t divergences like these aforementioned ones above between risk asset highs and lows symptoms of bottoms rather than tops?
- Why is the DIX so persistently high?
- Are we having a liquidity crisis here or not?
- Shouldn’t the growing consensus among traders that a major top is in mean exactly the opposite is true?
And so, in the spirit of answering these with a bullish alternative, I will share an $ES count that we can use if we do not see precipitous, continued selling from here (which is what the bearish count requires). If instead we begin to rally, there is a possibility that my great big pink B is being put in now. It would look like this:
It would involve us counting the decline from the all-time high as an ending diagonal, and today would be interpreted as a deep “underthrow” of that structure.
This would also mean that the great bear markets in all of these growth stocks has concluded and everything should rally for many weeks if not months from here. Note: I do not know the likelihood of this happening, but I point it out in case we start getting a rally that is extremely strong (with terrific internals). Of course, we will want to see Bitcoin get above that neckline, etc., but if those things happen, this count is a possibility.
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