Weekend Observations on the Stock Market: Bear Porn Edition

Though I have been determined to give the bulls the benefit of the doubt for as long as possible (bubbles can go on far longer than most of us can think is even sane), cracks first appeared, and now there are plenty of additional outright crevices at this point.

Let’s look at a variety of things.

My working hypothesis for the moment is that the S&P 500 may be forming a large bear wedge, perhaps even replicating the one found at the top of the dot-com bubble (discussed here, for instance). And so far, the rejection of 4600 continues to support that thought:

ES

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$GOOGL Wave Three Target

As an update to my last post here, there is now enough wave structure on $GOOGL to generate a wave 3 target, which I have noted with the orange box above us. Also, note the inverse that has formed.

GOOGL

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A $GOOGL Update

A quick recap on $GOOGL:

  • In this post, I interpreted $GOOGL bullishly. That call is still live, though it’s obviously taking longer to come about.
  • In this post, I anticipated the bounce to blue b, and we got that, and I also then suggested we may go lower again, and we got that, too.

So far, so good. Where do we stand now? The blue c I needed here needed to be a 5-wave impulse and that’s just what it looks like to me. There is a good chance that the correction is now over. (We are in the expected range for a wave 4 of this degree: big orange box.)

As readers of this post from earlier may note, I expect the indices to breathe first up, and then down, with $QQQ taking out its low on the next leg down. But $GOOGL need not take out its low as the pattern looks complete. So that breath may become its first impulse wave, blue one and two as I have it labelled here below (ignore their placement in time and price; I’ve stuck them on there merely as placeholders).

Once those materialize, I will be able to generate a target for blue 3.

GOOGL


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The Bearish Interpretation of $GOOGL

This is what the bearish interpretation of $GOOGL would look like. If today is a low, it would interpret today’s move as a deep underthrow of a leading diagonal, after which we may expect a bounce to blue b. If the move from here to there is a clear impulse wave, I would have greater confidence that today was a low of significance. If the move is a choppy, 3-wave corrective move, then we may expect another leg down that would carry us at least to blue c.

GOOGL

My bias remains bullish here; I am only posting this alternative as a hypothetical thought. This will be filed under observations because I am not calling for this in particular.

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$GOOGL Bullish Structure and Target

A breakout of this bull flag on $GOOGL targets the orange box.

GOOGL


Note: When my work is first published on this website, it is made available to patrons who support my work through my Patreon account. Over time (usually after a period of a few months), I make the work public. To gain access to my work when it is produced, please consider becoming a patron. More information may be found on my About page and on my Patreon page.