I have been accumulating evidence (e.g., here, here) that we may be topping. If these signals are right, timing things is always the especially hard part. I do worry that we’re seeing far too much bear capitulation. But, even if we are, it doesn’t mean the top is always right this very second.
I’ve spent some time evaluating fib relationships this weekend, and I will present a count that is effectively the same as the one I’ve been focusing on (“we’re at a big pink B”) but it gives the market a wee bit more time and price. At tops of significance, it can often keep going a little higher again and again and again, which is why top picking can be so infuriating—even if you end up being right in the end, it can leave a bitter taste.
So, let me at least allow some space, share it with you so you don’t go out of your minds if I’m right, and if we are in fact close.
There are some excellent fib relationships both in terms of time and price just above us. 4140 is possible. A lot of stocks are near their 200-day SMAs, some right at, a few just above, many just below. If more time is needed to actually tag that important SMA on individual names, so be it. Maybe they need it. If they do, maybe we need to go about 40 points above Friday’s high on the index to do it.
I am building a put position but I am using some duration, so if we get this additional push, I will be able to tolerate it. I also have a futures short, but will allow myself to get stopped out and I will make multiple attempts in this area if need be. So, my goal is to watch this, to be as patient as possible, and to monitor the signals that are flashing warning signs. And I aim to be nimble and if the signals suddenly improve so will my interpretation. But until then, I say it’s a top, and I will accept a little more upside if need be.
I hope everyone has had a nice weekend.