So How Bad Are Things? Weekend Market Update

Alrighty, there are a lot of things I want to discuss, so I’ll just dive right in. We’re seeing some delicious selling, and so we need to ask: Is this it? And if not, then how serious is it? And I will try to address those in this article.

First, Is this it?. I don’t know yet, to be blunt. And as much of me that wants this to be it (because I am bearish by nature), I am not yet convinced that it is it. And I will present some evidence that questions whether this is really it.


Bitcoin

Now, for the Great Liquidity Thermometer, I have been warning that it risked failure and with it equity markets (e.g., here). The frustrating part has been that Bitcoin often leads, and I’ve been watching it closely for signs that it would give up that head and shoulders pattern neckline before equities took a bath, but it held on to that level for as long as humanly possibly before finally taking a bath concurrently with equities.

At any rate, it’s given given us something more of an actual plunge—finally—but now how does that plunge look? Well, on the one hand, we have no idea yet if it’s finished. It could still be well within the move. If it is, we will want to see much lower prices still, as the H&S pattern’s measured move is somewhere deep down around $12-22K. And yet, I will note two features of the plunge so far.

The first feature is the volume profile. Bitcoin’s little plunge so far has taken it (unsurprisingly) to a POC (point of control, red line, the price at which the greatest volume has traded in this timeframe) and it has a huge volume node it will need to work through in order to go lower:

BTC

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Two Other World Indices That Look Like They Need a Further Decline: $FTSE and $DAX

Because of the mounting risk signals I have been seeing, I have gravitated toward the view that $ES may need to make one more splash to put in this big “E-Wave” of its even bigger “B-Wave” (you may review the look of that decline here). Other world indices look compatible with this, and I will display two of them, the $FTSE and the $DAX.

Here is the $FTSE as I see it:

FTSE

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I Believe an Inverse Is Forming on the $FTSE

I believe the $FTSE is in the process of forming an inverse head and shoulders pattern. If this forms as expected, I have noted the measured move of the pattern by the orange box above.

FTSE

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$FTSE’s Overlapping Wave Structure Removes Doubt About Market Selloff Being Corrective

The bears of course believe we’re just in the early stages of a massive decline, but to believe that, one must also believe that we are in an impulse wave to the downside. And the lack of strong counter rallies on the US indices (that I unfortunately had been expecting) means that one could count those indices that way, if one were inclined to do so.

But not all world indices are like that; for instance, the UK’s $FTSE 100. The multiple overlaps in the range I have highlighted is definitive proof that it is corrective in nature. This strongly implies that it will go on to make new highs. And I’m sorry, I don’t mean this disparagingly, the index is weak compared to its US counterparts, and it’s not going to be the last to top, it will be among the first.

FTSE


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