$COMPQ – Nasdaq Composite Index
The Nasdaq is not topping. It’s forming a huge bull flag (or cup with handle) that will ultimately breakout of this 16 year consolidation.
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Consolidation?
Looks like lower highs and lower lows to me.
a research firm has identified a H&S topping pattern.
https://lplresearch.files.wordpress.com/2016/05/05-17-16-blog-fig1.png
I get it, you want to diverge from that horrible new high in June call. But a 20 year cup with handle??!?!
You can’t even hold gold for more than 5 weeks and you want folks to look at a 20 year cup with handle?!?!
A week after the biotech to the moon and nasd 25k call, you sold your Labu at 35 after a 3 dollar pull back.
What’s the point on making long term calls if you aren’t going to trade that way?
That LABU call cost me a bundle.
BioTech (LABU or IBB take your pick), has possibly the single most bearish downward price channel I can find among various stock sectors. My charts show classic Weinstein stage 4 Bear Market price action and If $240-41 gives way on IBB, watch out below…
https://goldtadise.com/?p=369783
Zzzzzz
If you are sleeping on that one, the bottom of my IBB price channel in the mid June timeframe is around $208 or about a 20% drop. For LABU at 3X that action and you potentially have a 60% drop into the next ICL. Hope you have your stops set appropriately.
Good trading to all.
Gary, a good point was made by Joseph. After talking so much about the bio-techs, you took your long position off shortly after you put it on. Same goes for gold. Although you talk as if you are looking at the long term, you are a short term trader like most.
Just trying to avoid as much of the DCL as possible. People are already freaking out even though we managed to get in at lower prices than we sold.
My goodness people. I was correct about gold being manipulated. I was correct about how it would react once the manipulation was lifted (it even exceeded my expectations). When all of you were bearish in January I was bullish.
I was correct about oil. When all of you were bearish and focused on the “supposed” fundamentals I kept warning that oil was going to form a multi-year cycle low and never look back.
When everyone was bullish on the dollar, I was bearish and pointed out over and over that the dollar was topping. Recently with everyone looking for the dollar to crash I told you exactly what it would do. (Make an undercut low and then rally).
When everyone was looking for a market crash I warned over and over and over not to short stocks. It was too risky that the PPT could intervene and halt the 7 YCL prematurely.
For heavens sake how many times must you get this wrong before you start paying attention?
Gary, so your basis for the 7 year Cycle low being in is what you “think” the PPT will or won’t do?
From a Cycle analysis standpoint, do you not first need a higher IC Low and a Higher IC High to better confirm the Bear has ended (similar to 2011)? You have mentioned the 7 year trend line break for the DOW, SPX and Trannys before but those breakouts have now all failed, very similar to the failures we saw during the 2000-02 Bear.
So given the failed breakouts, what part of Bressert’s Cycle theory are you using to confirm the 7 Year low is really behind us?
I have not only a higher low, but a higher high in the Dow. If the 7 YCL was still ahead of us none of the indexes have any business making higher highs. As a matter of fact if the 7 YCL was still ahead none of the indexes have any business breaking their multi-year down trend line, yet all of them have.
Biotech has only been this oversold three times in the last 14 years. None of those were good shorting opportunities. How stupid does one have to be to think that this time will be different? You’re trying to pick up nickels in front of the steam roller. Step back from your day trading mentality and look at the bigger picutre. These kind of oversold levels always reverse and return to overbought. Where is biotech going to be when RSI reaches 70 again? I suspect at much higher levels than it is today.
Gary, your observations are very true. It is also true, however, that in bear markets, crashes often occur from such oversold situations. Much depends here on your 7 Year low call being correct. If it is not, lower lows are likely ahead.
Notice the last two bear markets bottomed at these levels. Remember this is a monthly chart. To reach oversold on a monthly charts takes a very rare level of selling pressure.
Yes markets can crash from oversold levels on a daily chart, but they don’t crash from oversold levels on a monthly chart. Once a market reaches oversold on a monthly level it signals the crash has already occurred.
We may have a triangle playing out in the SPX. As most know, triangles are more often than not continuation patterns.
Gary, I agree that those are the two key lines to watch and I’ve been watching them out of the recent top. Above you triangle is bullish but your lower line is also the neckline to Head & Shoulders pattern, so below is bearish. Still room in the triangle for some more chopping inside the wedge.
Nice cup and handle, but the ideal price to buy, is at the top of the handle, when it starts to break out, according the investors business daily, you can never know how deep the handle will be,
l’m sure you didn’t post this chart as a Nasdaq buy recommendation.. rather to show the BIG PICTURE,
Thanks again for the chart, 1 pic a 1000 wards..
Gary, just as Kupqaz, I think it is wrong to use the CwH setup as a bullish argument.
A forming cup w/ handle setup can easily develop into a rising triangle formation.
Thus, what you anticipate to be a bullish setup (again anticipation vs trading on fact) will be bullish indeed but not until one’s trading equity gets slammed as the setup succumbs to take a different shape (triangle).
FURTHERMORE, cup w/ handle is :
1) a short-term formation
2) that works on maximum -35% price retreat
not on a massive … -80% correction that lasts decades.
From this point of view, what you’ve charted is more prone to failure by developing another bullish setup, the rising triangle that I’ve mentioned –> this failure would translate short term into a CONTINUATION OF THE BEAR MARKET.
I’ll let the rest of you worry about day trading and trying to avoid every wiggle. I’m more of a big picture and an intermediate cycle trader. I don’t think the intermediate cycle in the stock market has topped yet.
But you did the same with gold and biotech?
T-bonds have to chart their DCL.
This cyclical need of longer-termed treasuries should give commodities and stocks a respite today, enough to allow crude reach my forecast 49-notch and CRB index to kiss its 50Wma.
…on the other hand, if US stocks will do today what Japanese counterparts have done today or rather what they have failed to do (no move on an above-expectations GDP rep), namely to provide a lackluster advance or even no advance at all while T-bonds decline…then, I do not know what kind of additional market evidence stock-market bulls will need to prove them they are wrong.
Alex, are you simply claiming that we are in a bear market ?
yes, Rozelina, I’ve been claiming that since, Friday JAN8.
I have announced here that a major advance would emerge (even though I came about 2 weeks early of calling it) and that’s what we’ve had: a significant new yearly cycle advance in stocks.
Initially, in late FEB, I thought this advance would last shorter, about 5w, but it proved another +5w longer.
I just know if spx futures breaks 2025, it could trigger huge selling, rendering Gary optimism wrong.
That’s nonsense. A move back down to test the 200 DMA would be a completely normal daily cycle low, nothing more.
I never understood these line in the sand predictions. Almost without fail they get proven wrong. Haven’t you guys figured out by now that everyone sees the same lines and the market consistently breaks them and then reverses to free you of your capital.
And how long is this cycle? Cycle cost us dearly from 2012-2014 on gold. Remember?
But that wasn’t his fault. It was minpulation.
Manipulation has already been confirmed, what’s your point?
We still managed to catch some of the intermediate rallies along the way.
Gary, I hope u r right though. But that break will break a monthly lower range bar low. It does lead to bear market during previous bear cycles. And isnt it true that when New President in voted into office, market crashes so that during their next election, they can rescue the market?
Gary, you’re a strong advocate of sentimentrader.
Thoughts on this? Or just ignore it.
“Low-volatility stocks have been handily beating their high-volatility peers. Over the past 12 months, returns in low-beta stocks have been good, while high-beta stocks have been horrid. The difference in returns is the largest since 2002 and historically when low-beta stocks have so greatly outperformed high-beta ones, it led to trouble for stocks in general.”
IMO it just confirms what we already know. The market is dropping down into a DCL. It is completely normal for a market to drop back down and retest the 200 DMA before a sustained push higher. Although I doubt we will get a sustained push above the all-time highs. Too much uncertainty with the elections and all. The real breakout and run will probably occur next year.
So is this “guarantee” now off the table? If so, what assumptions changed in the last 6 days?
==========================================
Gary
May 12, 2016 at 7:32 am
By mid June we test the all-time highs.
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Problem with his statement is there still a lot of Wiggle words mid-june and he didn’t dedine an index.
Gary, it’s hard to adjust with your weekly changes but I thank you for the wonderful blog and your insights! I am long biotech now but keeping a close eye.
Joseph: Do you have a link to that quote ?
You need to be a subscriber.
goody good!
treasuries feel the urge to complete their daily cycle. gonna start loading TMV later today or tomorrow the latest.
pebbles of all markets come in their right boxes, as I’ve figured.
sorry: TMF not tmv
Banks are looking good. And this is what you wanna see.
Hi, Chris!
discretionaries have now followed transports, NASD and Hang Seng in confirmed IC decline by providing a failed DC.
that’s all I wanna see 🙂
Nice pop in LABU looks like Biotech may be finally diverging…
nope. it is just cyclical activity – biotechs were late in their prior DC which had started on MAR17 and what now looks like positive divergence actually represents the advance of a fresh, brand new DC.
this DC will fail too.
biotechs are laggards and the only way worth playing them is to short them once evidence emerges that DCH has been reached.
If banks are strong, market will not tank. And this may be their defense against a 2025 breach.
treasuries are tanking as expected and commodities & stocks are failing to take the opportunity to rise –> that’s one more sign of underlying weakness, that commodities & stocks must be discarded.
if oil pops up on the ensuing inventory report, smart money will take that opportunity to dump their crude oil BIG TIME.
No Alex, July crude is heading for $51-$52 before any possible correction. And when that happens, yes, energy and commodity will correct. But in its place, banks could takeover and rally. Because banks feel that possible rate hikes are good for them. In the end, SPX aint tanking. But also aint raising much. In a range for many more weeks, frustrating all.
I’m pretty sure biotech has bottomed and the next leg up is beginning. The typical short term trade mentality of most retail traders will cause them to miss this turn again like they miss every turn, because they can’t hang on while the market churns at the bottom.
It’s why I almost always get these correct at the major turns and why the dumb money almost always gets it wrong.
Folks you absolutely must get a subscription to sentimentrader so you can fight your emotions and start making the right calls more often.
Not sure what you are reading but sentimentrader is advising caution. Smart money is long at record highs with smart money now heavy on the short side.
Chris, I think that CRUDE OIL JUST PUT ITS TOP (ICH) AT 48.73!
Pretty close to my expected 49 top.
SHORT COMMODITIES AND CRUDE OIL NOW!
sold my ECA, thanks Alex.
Watch SMH, SOX. MACD turning up. That could help support market too
Ya, I think commodities is about to pull back. GDX etc going to drop quite a fair bit. Semi conductor and banks will takeover. Take a look at AMD. I think this is a going to get more crazy stock.
i doubt it, Chris.
things will be nasty.
the worst is ahead of us through this summer.
best is to stay out of stocks or to be in stocks to short them –> DIS (disney) is worth shorting big time! 😉
Don’t know how you expect 3 more years of big gains, Gary. History has shown that, at 7+ years old, this bull market – if it still is a bull market, is already VERY long in the tooth.
Hmm, what about 1982 to 2000?
The odds do not favour a repeat. This is already the 3rd longest bull market in history. Economic reform of the 1980s allowed 2 decades of produtivity growht. Today, the balance of history, as well as long term structural factors do not support the the bull case as strongly. This past 8 years has clearly be driven by mobile technology, hence AAPL becoming the bellweather stock for, well, the world. However, AAPL has not produced anything radical in half a decade now, and stock market profits as a whole have rolled over for the last 5 quarters.
Either wars, interests, exuberant bullishness could kill it, and yet this is the most hated rally.. IMHO.
Banks, biotech, AAPL and GOOG all green after the Fed minutes. The market should close in the green, and maybe at the highs.
Dollar rallying just like I warned it would.
A 30 point reversal on SPX. This isn’t a healthy market.
VICTOR, you’re welcome! pleased to have been of help! 🙂
After all, Lady Market wanted to honor my forecast for a top in oil at 49 –> actual top = 48.94 😀 🙂
I have half a position in TMF at an extremely low risk entry 🙂
YAY volume on DUST looks great!
If we close under 2040, I have to think that we’re going to be looking at a really strange event. Tech traders will be going short, while the “market savers” will be putting their shoulder to the wheel and pushing for all their worth.
there is no such thing as PPT or market savers.
Things are relatively predictable.
Oil at 47.93 now. Nice!
going to sleep.
Wake up fool!!!
https://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets
For someone so smart in the markets that was a foolish comment
Gold is toast..
https://s3.amazonaws.com/tradingview/snapshots/8/84UR9EQb.png
Over the next 4-6 weeks we’re about to see just how idiotic this theory about gold avoiding an ICL will turn out to be.
This always happens at major tops and bottoms. People become stupid and all commonsense goes out the window.
We will see Gary. So it looks like the downmove to the ICL just got started today. 4-6 weeks? That seems too long
Chuckles lol…I let the loud mouth talk Gary, I am a true follower of your cycle theory…the rest and eat dead crow…
Gary – Concur