Ideal Roadmap For the Next Few Months

I pointed out a fib on Friday that could support an immediate drop from here. It’s not perfect though (it’s only one good fib relationship at Friday’s high—that I could find). And it’s a little uncommon to drop straight from a high (and also have it stick). Those are often retraced soon (not always). It is preferable to see a drop during the day that is covered to some degree into a close. Those have a higher chance of producing downward gaps that can stick.

I do not know if they are going to rug us now, or hold us up here for part of this week to do some distributing. If they do hold us up here, there is a host of excellent fibs just above us at about 4200 (I recounted the whole structure this weekend from scratch).

If they do some distributing, we may congest up here, toward the end of which we could get a little poke to 4200 where all those fibs and 250-day EMA are before a more serious decline begins. If we do that, I would expect a pause at 4000, then a bigger drop to the 250-week EMA, another pause, then a final drop to 3188 or so where there is a host of other fibs. After that, I would then expect a rally back to the 250-day EMA which could coincide with 4000 again out there projected as the pink B; lil’ holiday rally over there.


If we do get a decline here, it should last through most of September to get down there to pink A. If we do end up doing all of this, we will be replicating the dot-com fractal somewhat eerily closely and it could mean that the rest of the structure will become very intelligible to us. This choppy shit we’ve been in all year will clear up a lot and things will become easier (at least for me) to understand. The next several swings should be somewhat predictable, and a lot of fun—multiple V-bottoms, lots of motion, not so much chop.

If we do end up puking hard straightaway, I will look to begin assessing whether we are already in the move to pink A or not. Under 4000 and that becomes more likely.

Super Long-Term $MSFT Fractal

This article is intended to complement the last one I just wrote.

When we look at a structure like this, it’s very difficult to accept it readily as an impulse wave. You can try, but it’s difficult. I’ve taken stabs at that before (such as here). But this doesn’t really look good, and lacks good impulse wave-like fibs.


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Scary Talk For a Moment: Long-Term Outlook Revision

For this post, it will be helpful if you recall this post here. If you’re new, it may be worth looking at. Most importantly, reexamine (or freshly examine if you’re new) the second-to-last chart.

That whole idea was predicated on the idea that we could have a fairly quick (but largish) correction, after which we would resume the bull market for one more big leg up.

However, I now think that is not so likely.

The biggest reason for that is this: when I look at the weekly charts of things like the Russell 2000, Amazon and many others, what I am often seeing are very large distribution tops. These are not to be trifled with. Look how long they distributed Amazon. Incredible. That’s not the kind of top one would ever expect to see, in which we would have a drop as we have had, only to then run right back to all-time highs and keep going. When you see a distribution like that, they’ve literally gotten rid of practically all of it, and if they get back in, it’s going to be at much, much lower prices a million years from now. They don’t distribute like that, then buy it all back right away.

It will take them a long, long time to re-accumulate it and we haven’t seen anything like that process yet. I’ve posted some other examples of long-term distributions here and on Twitter, and I will list some links so you can review them: Caterpillar (here), Newmont (here), Tesla (here), Gamestop (here), and I am sure there are others, too.

This is making me question my proposed degree of structure that I discussed in the article linked to at the beginning of this article.

And furthermore, the structure we’re in now, reminds me of something that I will get to in a moment, and it all makes more sense to me now using this updated interpretation.

So, a quick review on the S&P 500:

What I have been expecting is a purple “c” wave decline that would bear a price relationship with the purple “a” that was the GFC, like this:


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$LMT: The Stock Has Been Distributed

My last post on Lockheed was here. From that post, the stock did not stay elevated enough to resemble the fours and fives I had been hoping to see, another clue that we’re not in good times. Furthermore, it has challenged its long-term rising channel, and another selloff will have it leave that structure.

It may now best be seen as a pattern of distribution (there are many out there), and the next immediate target is the lower green trend line which will inevitably fail at some point.


Here’s One Last Thought on the S&P and then I’ll Shut Up For the Weekend

I just had a thought. Last one, I swear. I’ve had too much caffeine lol.

But really, I think there’s no way whatsoever that I can entertain a bullish thesis right now. Note the public Adobe chart I just posted. I will repost it here so you don’t have to flip:

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Public Chart: The Very Dark $ADBE Situation

Now, I’m getting trolled a bit for being bearish while we have this squeeze, and I know that looks silly, and a lot of people like to think of me as often wanting to be bearish for the sake of it or something. But, really, it’s these structures. I’ve been bullish most of my life. You guys only know me from after the COVID crash when I started using social media. And yes, I was way too bearish there, but I had good reasons: they had just annihilated the world economy—so it seemed to me, and to many—and it didn’t feel like that had been priced in completely. And I didn’t give infinity QE enough credit. So, yes, I thought the rally out of that low was bound to fail. But don’t forget that I changed my mind and was bullish for most of 2021, and correctly so. I think it’s unfair to think of me as always wanting to be bearish.

And right now, things are very, very different. There’s just no way for me to interpret the Fed as being friendly right now. Earlier in the year, I was more open to a quick, one-and-done correction, at least in principle, but as these structures have become larger, there’s no good way to do that, so far as I can see right now.

And just look at this chart. It’s absolutely terrible. The structure it’s in right now is an awful one, and these very often fail.


So at any rate, a whole ton of things look like this and I think it’s not good. A lot of things can still get cut in half from here.

A Look at Microsoft, Since It Was Dumb And Pumped on an Earnings Miss

My goal here right now is to make sure that I’m not being stupid and being bearish in a new bullish trend. The last two times I discussed $MSFT in detail was here and here. This has had a 13% rally since its earnings miss, and let’s review how things look now.

In those prior articles, I discussed the danger it faced were it to fall from this structure and lose its long-term trend line. And nothing really has improved here. Its rally did little but run to the top of its trend line.

And though I’m trying to be cautious and ensure that I’m not missing an entry into a big move to the upside, if I just look at this as honestly as I can, it still just looks terrible to me. It counts well as a correction. Now, down there to yellow “a,” there’s perfect 1:1 wave balance (between the pink waves that compose it). And if that was the whole correction, that would be a wave balance at which it could finish. However, what comes after it, that little triangle down there (see the others I detected here—they’ve all become bigger, but they’re all still valid) is in no universe what I would expect to see at the low.

And so, I’ve just got to insist on that for now. I think there’s got to be another leg down, a big yellow “c” wave. And if this fails, it can see a 40% drop (at least). All of this would be totally different had this created an impulse wave off the low, but it didn’t. And so I just can’t trust it right now.


There Are Three Things I Can Point to That Are Potentially Imminently Bearish

In the last post, I looked a a variety of ways I believe the market can proceed. I want to add three things I also see that could be very bearish.

1. There is a structure that we all saw that broke down, and we’re back involved in that structure now. I am referring to the head and shoulders top from which we broke down. We are back at the neckline now.


That doesn’t tell us a whole lot, other than that we’re at resistance, which we already know because we’re at the consolidation from early June. But, it’s a good reminder of the prior breakdown.

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A Few Remarks I Can Make for the Weekend

I can’t really make a firm decision one way or another here.

On the one hand, I have been expecting this to be a bear market rally that would soon fade. Soon is now a poor thought to have had. First this whole recent structure became far larger in time than I expected, and now it’s quickly becoming very severe also in terms of price. Even if it does eventually fade, it will be a smaller victory given the extent to which I have been wrong to expect this to fade in terms of both time and price.

But let’s walk through a few things.

First, crypto looks not so great but also not so terrible as it did.

Bitcoin, which I have maintained has been in a bearish structure, has done nothing bearish with that structure (yet):


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One Note on an $SPX Level

In this post, I gestured toward the equality of legs that was available to us at the close. That was based in part on the possibility of an overnight reversal, and I used the 5/31 high for that because equality of legs is ideal and that’s where I could find it at the close. However, if we use the tippy-top of that advance (which would be more natural anyways) at the green arrow, we have another wave balance of 1.272 at 4102.70, which is about where futures are now. (And just above that, we have another—1.318—at 4119.55).

If we do open about here (or close to here and arrive here today), and if this is a bear market rally completing, then turning down in a new leg of cycle (yellow) degree should make itself very clear, and we should see a strong move down and either of these other two fibs would also work.


So, I’m just noting the wiggle room we can have if we are going to head lower again soon.