One of the things I’ve been looking for tonight is a clear relationship between the decline of the GFC and the decline of this year’s market drop. And I discovered an interesting price level by accident. I will share it with you, but it seems insanely unlikely (but possible).
It would be a very bullish alternative. Why suggest it as a possibility? For starters, it was a big mistake of mine in 2020 to see the market go up like that, constantly expecting it to fall, when it just never did. And so: it’s important to realize that market declines can stop where we’re not ready for them to, and sometimes the markets will want to start going up again, and when they do, they can do that for a very long time and one won’t want to wait around for months and months fighting that.
So, let me show you what I found:
This decline is of the same degree as the GFC (that’s the purple letter you see in there). And so we will want to see a relationship between this decline and that one. We do not have such a relationship at the 6/17 low (which is why I have been expecting lower prices eventually). Oddly enough, we actually do have one at today’s low. I found this entirely by chance as I dragged a fib tool. Weird, isn’t it? Now, my big complaint about the rally off the June low was that it is corrective in nature and not impulsive. I.e., it was not a good candidate for the low. But the low doesn’t have to actually occur at the lowest price, from a wave-counting perspective. The rally from that low could have been part of pink B of yellow c, for all we know.
So, I’m just throwing this out there because of the chance discovery tonight that we stopped at today’s low at a price that is exactly equal to the decline of the GFC. In other words, perfect wave balance with that bear market. And, it turns out if we give this final (yellow) c a measurement here, that it bears a fib relationship with yellow a also exactly at today’s low.
And so, if we do just happen to start rallying without ever looking back, it would be a very bad idea to insist that the bear market must go on still. We should at least entertain the possibility that it can have ended. Whether it has remains to be seen. But hell, if they pivot, who knows what it possible, and like hell am I going to fight the Fed.
Do I think this is probable? Of course not. But, if we don’t head lower first, as I would like, and if we do rally but also end up taking out 4367 discussed here, what will you think is going on? So let’s keep this in a back pocket as a thought, just in case.
Trader sentiment is certainly bearish enough to justify a major low. Consumer sentiment is at a historic low, and we do often see that towards the end of recessions. And if the GDP print comes out negative this week, we’ve been in a recession, but the market tends to look 6-7 months out in front of us. Coming out of the GFC, economic data was bleak and actually still getting worse, and yet the low was quickly moving far behind us. It’s possible for something similar to happen here and it’s important to remain nimble.
So, if price starts shouting loudly, let’s remember to listen to it.
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