In addition to the long-term structure discussed here, there is another that I will also consider. It is also possible that we have been in a very large broadening pattern. There is a sense in which this may be my favorite alternative because I think very few would see it.
On this interpretation, we may continue to rally to the “bull flag upper rail” (the middle green trend line) and then congest for a bit. I like this because it seems to me that the vast majority of people do believe this rally we’re in now will fail. And I hate that. I would hate for them all to be right—as many of them were about us getting to 4000 or less.
So, on this count, it’s just a huge, stupid structure intent on tiring everybody forever and ever. At that orange A-B junction, that’s when I think most people will be inclined to believe the rally will fail, and it would be best—I think—for the market to go and do what few would expect, namely, to gallop suddenly to all-time highs. And in that move, of course everyone will will be celebrating the looming “melt-up” to 6000+, only for us to then actually have a real crash that everyone is now expecting (for the “E-Wave”).
The bears who want this rally we’re in now to fail, want it to fail because they want to see the capitulation low (we haven’t seen that on the VIX yet, for instance). This would give it to them, but only much later (down at that yellow b).
So I like this one the best. I think it would be the least expected.
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