The Weekend Review of Important Assets

Ok then, finally out of that fucking range lol.

My thinking here has been that it sure looked a lot like a B-Wave triangle, but given my perception of sentiment and the sheer obviousness of the structure, I didn’t really want it to break down. And coupled with all the weirdness I thought I detected near the top, all of which at least opened the door to my mind that the October low was the low, it would be nice to have seen an expanded flat here, followed by a resumption of the uptrend. I prefer it because it helps me to make sense of the strength in high-yield and the terrible consensus that’s developed that we’re going much lower (that can’t be rewarded forever). And breadth, and lots of things.

Alright, so if all of that is right, it’s possible that the October low was the low of a mini bear market of perhaps many still to come (you may review that here). And if we don’t fall apart again, it’s also possible that we’ve seen the low of the first major pullback in the first mini bull market of perhaps many still to come.

So, the bullish count here is that we should be in a 3rd minute (blue) wave up:


And if the October rally and this pullback is an intermediate (orange) 1-2, orange 3 is way up at 4777.

If that’s right, we’re going to retake that 200-day, and normally—at least in the past—we consolidate under it, then gap over it in order to keep it (you can read more about the gapping behavior around 200-day SMA here). So if this is right, we should rally some more, getting closer to the moving average, then consolidate for 1-3 days, then gap over it and have a pretty good squeeze as we will also break the major down trend line.

Now, none of this is a lock, it’s just what makes good sense to me here. I think we’ve had a full year of mostly selling, lots of individual names have been harmed, and I think it’s a good spot for a long breather. Perhaps the Fed has restricted policy enough to make a difference in inflation (or really, navigating the healing of the sovereign debt crisis; remember, I think they want some inflation to persist), and perhaps they take a break for a while now, and I think the market should be weeks and months ahead of that, and I don’t think we’re all going to get an e-mail saying we should buy stocks now. So I like that this would cause people to look back and say, “Ah, that was the low after all.”

That said, it all sounds good, but we still need to go up more, and if we don’t, there still remains a chance we could fall again. It is my opinion that the consensus has been either:

  1. The bear wedge we were just in would simply fail, or
  2. We would poke out of it in an A-B-C and then fail.

Well the first didn’t happen, and the second one looks like this:


It is possible. If it happens, we can fall to 3600.58 (or lower). But, I really just don’t like the consensus view when I can detect it; I want nothing to do with majority opinion when I can have it, and I’m sorry for that. So, this is possible, but I don’t like it. I did like it before. I liked it until JNK was so strong at the high, and we got that extra wave with the CPI spike, breadth not deteriorating at the high, that sort of stuff. And of course, as we sold off from the obvious down trend line rejection, opinion has become solidly bearish in the meantime, and so I’m not so sure I like the bearish case right now.

So, let’s see if we get more strength next week. I’d like to think we will. I’m playing for that, but I could be wrong about that.

Speaking of strength, let’s look at $JNK. Let us just marvel at the fact that it’s almost made it back to that CPI spikey high:


It is possible that this is just a big short squeeze before a major drop, but if the strength is genuine, and if smart money are the major participants in this instrument, it would be weird for them to buy high-risk assets prior to a major decline in risk assets generally. So, I like the strength in this.

And I am intrigued by the fact that while Tesla puked its guts out, Apple had a strong sell, and the S&P languished in a bearish wedge, Bitcoin ground out this impulse wave (the blue 1):


So, as with JNK, these liquid assets are looking good for the time being. And if they’re moving up, equities may too.

Last, I want to look at Apple. I have been speculating that this may be an ending diagonal down here, and it broke out today. So there could be a big structure complete. At a minimum, it should at least go and revisit the major trend line it’s broken through:


But, given the bullish divergence on the daily RSI, it’s possible that we get a whole lot more than that.

Alright, so: I’m not bullish just because. But, if it’s the minority stance to be bullish here, I would rather be there as my deep hatred for consensus opinion grips me from time to time lol. Do keep in mind (for those of you who are slightly offended at the bullishness, sorry): I remain long-term bearish and I do think virtually every high-flying tech stock has got a lot further to go down. But, I think much of that may need to wait for the next tightening cycle.

And there is enough here, I think, to support a bullish market for much of next year or maybe even a little longer. See you next week.

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