A Few Thoughts Summarized

Very little has changed over the course of today’s session. I will rattle off a few observations.

It is bearish that Bitcoin has followed my very bearish wave count so closely. After a clear impulse wave down (green 1), it has produced a 3-wave retracement that has met three technicals:

  1. It reached the 50-61.8% retracement, but went no further
  2. The very tippy top produced a wave balance of equal legs between the two upward legs of the rally (the “a” and “c” of green 2)
  3. Blue “c” looks to be a fairly clear ending diagonal, congesting as, I suppose, it is distributed again at these prices

BTC

The expected target for a wave 3 here is about $15,000, but it can also go much lower. The measured move of the bear flag it is in does just that, giving us a target of $7,000. So, this looks terrible in this configuration. A drop to either of these targets implies a serious problem with systemic liquidity.

It is bearish that I can continue to count the S&P 500 in such a bearish configuration, first at yesterday’s close (with blue “c” equalling the length of blue “a,” but now simply with blue “c” equaling twice the length of blue “a”—either will do).

SPY

It is bearish that we rallied for two days but could not close above any of the highs of the prior area of consolidation (orange ellipse). Someone is getting out here. It is also bearish that we had a wall into the close, often a sign of panic buying (or short covering) by retail investors once liquidity dries up near the close. This phenomenon is a little less common on Fridays, as a wall into the close can sometimes follow through into Monday. But given the look of Bitcoin, for instance, and the excellent wave count that found balance right at the close, I still favor a move down from here, perhaps immediately.

I do not always see a broad consensus among the analysts that I follow. But I do here. It would be natural, of course, for folks inclined to be bullish here to expect higher prices to come. However, even among those inclined to be bearish, from what I can tell, a very significant number of them also expect higher prices in the short term. Many of them expect a rally that will fill the the other gap and produce a larger bear flag:

SPY

That may happen, but it’s extremely dangerous to see such a broad expectation for higher prices from here given the poor breadth, copper crashing, the look on Bitcoin (above), the bear flag on junk bonds (third chart here), the geopolitical risk, etc., etc.—none of which has improved. As it stands, I now only see two or three analysts looking immediately for lower prices, and I’m one of them, and I’m content to be in rarified company here for the time being.

I can probably post a bunch of other stuff, but you get the idea. Have a fine weekend.


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