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And it lines up with the 94TD cycle lows…Hard to believe that a retrace this shallow is another cycle low, but it very well could be (notice that touch of the 50day EMA in cash SPX about 20 minutes before the Friday close (the hardest trades, going long over the weekend, minutes before the close in an illiquid market)…
The more I look at this I think what’s likely going to play out is the market will finish the T-1 pattern and reach 2450-60 and then suffer a bigger correction in May.
Sell in May and go away…
Could be. Although I would want to be a buyer in May or June after a correction.
Damn you sure like to flip flop Gary. And you bash those who practice EW saying they cover all bases. So do you. One day you say the market is done correcting and will now go up into a bubble phase the next day you say it will go up a bit to 2450s then correct big before going into the bubble phase, etc. Who can follow anything you say given how you always flip flop?
I think we’re going into a bubble. No change there. I’m just trying g to figure out the short term wiggles.
If you don’t care about the wiggles just get long until the bubble tops.
Gary,you are not alone with a call for final push up in the markets with the S&P topping out anywhere from 2450 to 3000 ( depending who is making the call). I have noticed that even some of the perma bulls that have been dead wrong for years, are starting to falter with their bearish resolve with various excuses: “It’s the central banks fault the markets are being artificially inflated”, or “the EU is collapsing and money is pouring into US stocks” (the fact that European markets are at or close to all time highs is ignored) and then there is the latest narrative, “World war is on the horizon and stocks always rise during wartime”. My point is that their seems to be a consensus building that the markets will continue up with no regard to deteriorating fundamentals and rising interest rates. In other words “This time is different”. All seasoned traders have heard that one before.
I would argue that this time is not different it’s the same. Most bull markets end in some kind of bubble especially if central banks keep interest rates too low too long.
I think predicting a blowoff top like you are doing is the most difficult market timing thing there is. I would be REALLY impressed if it plays out the way you are calling, in the magnitude you predict.
And your modifying the wiggles leading up to it do not bother me in the slightest.
The most difficult thing is also ignoring the secondary indicies/ETF’s that are already faltering. That is the “why” and “how” so many people get poorly positioned. Basically, Nasdaq “tech” has been ramping higher (in a parabolic state) since around Feb 2016 (See the semiconductor’s). The S&P is second, however financials and energies have been faltering (retail is in the tank), then you have smallcaps and midcaps that have been languishing in the same range since the parabolic sprint into the first FOMC rate hike in mid-December. Meanwhile, rates did their move higher, but still lingering at the lower end of the range (i.e. TLT). Throw in a lot of algo driven illiquid chop and you have a recipe for a lot of confusion. If this market isn’t “stair stepping” higher with no volatility, then it turns into a spikey, choppy mess where the algo/HFT crowd simply steps away for awhile and the price vacuums appear. (See last Tuesday).
Even now, small caps and mid caps are unable to keep up with large caps and tech heavies. SM bubble, if there is going to be any, will likely be powered by large caps and tech heavies. Others may not go up as much. This is point one.
After the 1st buy point in November, there were 2 more buy points: one in early Dec and another in early Feb. There is no need to be overly anxious about the so-called bubble phase along with its wiggles until price confirms. Depending on one indicator, NYMO and a minor +div may not be the best approach. At important critical turning points or shortly thereafter, many supporting indicators tend to chime in. BP indicator and % deviations levels are unlike ly to support any major up move from the current level. A deeper correction could do the trick. This is point two.
This market looks awful toppy to me but April is seasonally one of the strongest months of the year so who knows, maybe we will see news highs again real soon. I am betting that we won’t. It does seem like too many are looking for a quick resumption of the bull.
Gary — nice video review. Are you long stocks now (or going long this week perhaps) or waiting fr a deeper correction in May? Thanks!!
Partial position. Waiting for a setup to buy more.
Gary, in the past you have said that when the McC Osc comes back down and creates a positive divergence with the market, that is the time to buy. What’s different about this time? Thanks.
I have a feeling this is going to get a bit complicated, due to the interventions to prop the market up ahead of the inauguration, Humphrey Hawkins address, State of the Union, and FOMC rate hike.
I think we’ll get a buy sometime this week. I think that unleashes the final leg up in this intermediate cycle and then we get a deeper correction in April or early May.
Nothing has changed regarding the bigger picture. We still have a bubble ahead of us. The Fed has been running he same game plan for 17 years. It already created three bubbles. The fourth one is on it’s way.
As long as central banks keep running the same policies over and over they will continue to get the same results.
Bubbles, bubbles, bubbles…
Hi Gary – Long time lurker deciding to post.
You pointed out previously that the leveraged ETF’S can point the way at a turn. Looking at the weekly Vol on UVXY something is up! Smart money is normally short UVXY for obvious reasons. Maybe they have all been covering?
Maybe we have a very sharp drop first to give us the so called “slingshot” move higher. Eg election night move.
Any comments?
Interesting.
The trade of going long SM is being portrayed as a next trade.
In the overall context the odds and return are not so great, perhaps +15%?
There should be around other trades with bigger odds and bigger potential return.
Research and patient are the answer.
If a SM bubble would indeed come, then the trade of the season would be to short SM at the ‘peak’ with a 3X leveraged fund.
However, the good days of the SM are counted, not too many more., till there is has a good correction.
People did not believe the 2008-9 crash just before it was going to take place and kept pouring money into it..
Wait for credibility to wane and for fear to set, then we would see SM fireworks.
Get ready, stocks are going to form a bottom sometime this week, and gold will form a top.
It will boil down to when the dollar completes its ICL. It’s already very deep in the daily cycle at day 35.
This could get interesting if the PPT turns the market back up before the open.
Things do not look nice for the SM as per this evening the futures are at -0.77%.
Gold is at ++++
Fasten your seat belts.
I’m pretty much the only one who ever gets these turns. Technically the market always looks bad at cycle lows. That’s why technical traders always end up on the wrong side of the market at a cycle low.
Mark my words. Stocks are going to form a bottom sometime this week. If it’s early in the week then it should be a daily cycle low, followed by one more higher high before a more extended correction in April or May.
If the bottom forms late in the week and drops below 2300 then it will be a larger intermediate cycle low and the next rally will start and run at least till August or Sept. before topping.
It may boil down to whether the PPT intervenes in the morning to prevent the market from gaining any downside momentum.
If stock markets do keep correcting it looks pretty certain gold will keep on rising. The key number to watch will be 1300 dollars plus or minus as that’s where major resistance on the 6 year gold bear market comes in to play. I say “plus or minus” since it does depend on how much time is needed to arrive at the resistance line.
A break above 1300 will lead to quite a celebration for gold bugs everywhere and could even signal that the bear market is finally officially at an end. We are just 42 dollars away from that critical line this evening and while it sounds like a lot it is easy to imagine it will be but a mere walk in the park should markets take a nasty turn South as the week opens.
For those less familiar with resistance lines the way to identify where the threshold lies is to simply trace a line across the prior peaks of the last 6 years and then visualize where the next resistance point will come in. So use the peaks of 2011, 2012 and 2016 as your references and you can readily see that 1300 is very close to the break out point where the nature of the gold market could change for the coming years.
Use the monthly or weekly charts to make your own best guess.
http://finviz.com/futures_charts.ashx?t=GC&p=m1
Meanwhile, mining stock seems to be doing what it usually does when markets soften which is to be sold off despite gold rising. So the ETF’s will not perform well and the leveraged products will probably disappoint. This is expected and is not really out of the ordinary. What really matters is what happens afterwards as markets stabilize since those cheap mining shares can be bought back rapidly and see a steep rise. Especially if the gold chart has turned bullish.
Just something to keep an eye on as the next days pass since we really can’t know for certain if the indices will gain support or take a dive. I sure can’t predict it.
I wonder what happened over the weekend, or last week, to have this evening significant change?
USD/JPY at -0.91%
Paul Ryan failed and the Trump agenda is now on shaky ground.
The market previously bought into the Trump agenda and now uncertainty.
Agree Dreamer, too many chart gazers and too few readers of newspapers from around the world. Trump is done, no credibility , 90% that comes out of his mouth is lies. Hes now courting the democrats. The great negotiator couldnt deal with a majority and his own party!!!! Now he has to go hat in hand to the democrats. That is what you get with a glorified used car salesman as ur pres. SM going down, gold rising.
Oh come-on macman1519,
Trump has 95% of his term left as president of United States + Republican majorities in House and Senate till at least 2018.
You shriek like Sen. Lindsay Graham upon seeing a spider.
Gather yourself Sir.
SM will fall, on its own schedule, the fall may last four years, or longer to get to the bottom, but it will.
I was puzzled why the SM rose and gold fell after the Healthcare bill was dropped on Friday. It kind of looks like it was a fake….At the moment anyway. Last couple of months have really showed how patience/waiting really is the best way for now……sideways markets all round
Market futures are taking a beating and gold is rising. Is this what we can expect when the New York markets open in six hours or will there be the usual reversal ?
Agreed. It could be the usual Monday purge, all though gold has smashed though $1250 and dollar through 99.3, so I don’t think its that straight forward.
Gary, which levereged etf would you suggest to buy to profit from this next bubble phase??
Thanks.
F.