The Weekend Review of the Markets

So far as I can see, there two basic possibilities.

Ever since this post, I have been acknowledging that the October low may be the low. That was motivated in part by the fact that the end of year top was weird in terms of structure and internals, and things like sentiment all can support it.

Now, if that is true, there are two things we can do up here.

The first is to count the structure like below, where we’ve completed intermediate (orange) 1 in early December, and have already also completed a 3-swing structure (the green A-B-C) for orange 2:


If this is right, we can be in a 3rd wave up and we should eventually probably go to all-time highs.

That’s what I was looking at as a possibility, and we have gone up from the 3800 area, and this continues to be possible.

However, the other way to count this is like this, where the mid-December high was the high, and we have not yet completed a 3-swing move (in green) to complete orange 2:


I don’t have a strong preference, though I am more open to the latter than I was in part because I like to see more obvious “twos” up and around here in lower degrees, and I don’t think I see a good one (I discussed that all here).

If we are going to drop again, I’ve already discussed how things like Amazon, high-yield bonds and the dollar can agree with it (here) and those features all remain true today. I will add a few more things to that list today.

Bitcoin has moved up as I expected it to on the other counts page. For those of you who are not in that tier, you can see my last Bitcoin update from that page by clicking on this link. I projected a 3rd wave advance and supplied a target and it’s shot straight to it. As it is now, the green 3 is at the 1.618 extension of green 1, which is typical of a wave 3. It’s possible that it goes to an even higher extension (like the 2.618), but IF it stops here, it should be entering a 4th wave of minor (green) degree.

If it does that, green 2 took about 15 days to complete, and it’s possible that green 4 does about the same. And while it’s consolidating, equities can lose their strength in tandem:


In addition to this, many instruments are near trend lines that may provide some resistance:

On Apple, sellers may show up at this trend line:


Microsoft, too, is approaching a trend line:


And in addition to the S&P approaching it’s main down trend-line, so are other indices such as the Russell approaching trend lines as well:


Ok, so if sellers show up across various instruments in unison, we can have another drop.

Zoomed in on the S&P, the wedge I speculated about on Thursday still looks acceptable here.

If we continue to chop around a bit, we might still squish up here for a few days:


So that’s my thinking here for the time being. If you’re looking for a much more bearish alternative, it’s essentially the same as this one above, only that when/if we drop, we won’t stop. But at least in the short-term, it would look about the same as this ultimately bullish count, as it would probably top around here, too.

I hope everyone has had a nice weekend.

Parts of this article may be reserved for members. You may learn more about becoming a member on the Join page. There is also public and private content on my Discord server. The invite link is here.

Comments are closed.