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.

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.

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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:

Read more “Scary Talk For a Moment: Long-Term Outlook Revision”

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.

Read more “There Are Three Things I Can Point to That Are Potentially Imminently Bearish”

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.