Last Week (1/24/20) Tracking count from Reversal or Small-Degree Pullback (1/24/20)
This Week (1/31/20), the size of the net decline from ATH, based on wave degree considerations, eliminates the small-degree pullback (green scenario in Chart 2 above, b-down of (z)[e]-up form the red X in Chart 1 above).
Chart 3 below updates Chart 2 incorporating this week's additional sell-off.
Furthermore, the possibility of a larger-degree pullback remains (green scenario in Chart 3 below, [b]-down of Y-up from the grey X in Chart 1).
Chart 4 and Chart 5 update the triple-zigzag or the impulse tracking from the Oct low in ES.
You will recall my post on 21 Jan at the time of the top (I dont put these posts on on specific dates for nothing) and seen so far what has happened.
ReplyDeletehttp://market-timing-update.blogspot.com/2020/01/mtu-weekend-ed-expanding-edt-triple.html
It preceded Fund Manager's Ray Dalio's amazing comment in the press about the need to be fully invested -
https://www.marketwatch.com/story/founder-of-worlds-largest-hedge-fund-says-cash-is-trash-as-the-dow-soars-to-records-2020-01-21?siteid=bigcharts&dist=bigcharts
But today Ray has changed his tune stating -
https://www.marketwatch.com/story/heres-how-bridgewaters-ray-dalio-plans-to-invest-amid-the-coronavirus-scare-2020-01-30?siteid=bigcharts&dist=bigcharts
Perhaps if Ray had been on my investment circular list he would have done better.
http://market-timing-update.blogspot.com/2019/12/mtu-month-end-ed-time-price-and-gaps.html
Anyway the mkt has started the reversal of some type I said would happen around this point. Like MTU says is it main trend or just a pullback for a couple of mths.
The answer depends on whether the intermediate cycle running is up. BUT given that the old stks of the DJIA appear to have peaked their 5 waves from 2009 and possibly 1932 in Jan 2018, and the new tech stks components may have peaked recently, we need to consider whether a medium or long term mkt peak has just happened.
I would ask the question what if 14 days ago the mkt did peak and we are in for 3 - 5 - 10 - 20 years if zig zag bear trend ? We have just also passed 20yrs from the 2000 top, & approx 54 yrs from 1966 top and 90yrs from the 1929 top. Remember Dot Com ? How are average investors going to handle this because at some point the mkt will be all sellers and no buyers.
Often when a peak sets in many people even mkt traders arent aware of it. Take Feb 1966, and peaks in 1968, 1970 & 1973 & 1981 let alone 1987 & 1929 & 2007. What is everyones strategy if the the peak has passed ? What will the passive investors out there do. Stk prices cant go up forever without a large correction or exhaustion.
Based on chart 1 above there is prob more corrective action to follow to reach ST retracement levels but the critical period will be the window between March to June and Sept this year which will tell the LT trend.
Everyone is assuming the mkt will advance during a Republican in the White House term but they didnt during Hoover's & most of Nixon's time and were choppy during both Bush 1 & 2.
Thanks Mkt Man.
ReplyDeleteMy previous post above is simply to alert readers to flag the possibility to exercise extreme caution at this time.
ReplyDeleteIf that intermediate cycle is still intact and up we may see a melt-up in the 2nd qtr, BUT given the wave counts of all stks and some blowoff patterns on the techs it would go against std EW theory and past normal observations. However one might have also said that in the 1950s & 1990s.
In saying the above I am relying on observed past patterns to form my view.
I would also add that in Reagan's term the mkt was down in his first 18 mths & last 18 mths in office. 3 out of 8 years (which is our Fib numbers too).
There are a lot of monetary problems in the world at this time and various problems in China and EU. Reminds me of the 1970s in some ways.
We need to see where the mkts end up by mid March - April.