Expect the unexpected
מעודכן
Notice the similarities between the 1st leg of the current correction on the daily chart compared to the entire correction on the weekly. Similar divergence in RSI on each timeframe. Similar strong intraday reversal bounce to start the current leg up.
Bears are all ubiquitously calling for a lower low. Longs are all looking for signs of capitulation. It's reasonable to expect that both get burned. The bear market rally in March made no sense, was based on nothing but Fed speculation, lasted entirely too long for its own good.
Why should this time be any different. A double bottom higher low here followed by a Santa Rally can absolutely happen because 1) Megacaps could sandbag forecasts which create initial kneejerk reactions to the downside followed by bargain hunters swooping in to buy the news 2) The widespread perception that this entire recession has been "manufactured" by the Fed and that it is still in control of that manipulation. (Only when perception shifts to the belief that they've lost that control will wave C ensue)
I wouldn't load the boat here but shorts need to be very careful to not get burned.
Bears are all ubiquitously calling for a lower low. Longs are all looking for signs of capitulation. It's reasonable to expect that both get burned. The bear market rally in March made no sense, was based on nothing but Fed speculation, lasted entirely too long for its own good.
Why should this time be any different. A double bottom higher low here followed by a Santa Rally can absolutely happen because 1) Megacaps could sandbag forecasts which create initial kneejerk reactions to the downside followed by bargain hunters swooping in to buy the news 2) The widespread perception that this entire recession has been "manufactured" by the Fed and that it is still in control of that manipulation. (Only when perception shifts to the belief that they've lost that control will wave C ensue)
I wouldn't load the boat here but shorts need to be very careful to not get burned.
הערה
As expected Megacaps sandbagged their forecasts and investors came in for 2nd helpings immediately. There was no sign of fear in morning trading. Looking for a test of the 1st band of the anchored VWAP (brown line) soon...הערה
Now that we're 4000+ it's time to unload some of those longs. Should tap the 200DMA around 4055 and perhaps even challenge the trendline established by the ends of prior bear market rallies.Maybe it will make a lower low after, but at the very least I see a retest of the 200WMA around 3600 (for a triple bottom structure) followed by a massive bull move.
הערה
Look at all the consolidation that has happened this year (I drew them as EW triangle patterns but they could very well just be expanded flats)
The 3600 area is strong support and even if we do make a lower low, I'm not expecting it to stay in the range of the larger triangle.
We're looking for our strongest bear market rally yet that will challenge 4325 and possibly push as high as 4500+ and have people once again talking about new ATHs.
I have dumped 65% of my longs (I remain heavily invested in cannabis) and will accumulate once again at 3600 and below.
הערה
Now 80% out of longs and expect the short term trend to turn soon. Bulls are getting ahead of themselves. Perhaps one more thrust into 4100+ but I believe wave a of B has concluded.The days of easy money and V bottoms are over. Some kind of double bottom is needed here (I believe it will be a higher low around the 200 WMA ~3600-ish) for further movement up.
Took a few shorts for laughs and will take more if we move above that trendline... it'll be a false breakout/bulltrap.
הערה
We got the one last thrust to 4100+ and as expected, it was a bulltrap and we've started retracing. still believe this is a B wave and we won't make a lower low. Looking for a double bottom around the 200 WMA on the daily chart to confirm.
הערה
I've been right about the general trend of the market in the past several months and here's a chart to show what I've been looking at. What I'm anticipating is more consolidation between the 200 day moving average (top blue arrow) and the 200 week moving average (bottom blue arrow)... with an eventual break to the upside that turns out to be a false hope rally followed by a sharp decline to at least 3000.
Timing wise all big tech reports early next month. I expect those reports to have initial reactions to the downside, followed by bargain hunters swooping in just like back in late October to form a triple bottom as we retest the 200 week MA.
We should be good for a nice little run into the summer... maybe even talks of new ATHs, at which time you should start thinking about taking profits and converting to shorts for what will be a very impulsive C wave downwards.
GLTA!
הערה
I do want to present an alternate scenario where this entire B wave has been a flat starting from last summer's lows. In this case the reaction from feb earnings are actually positive and we never retest the 200 WMA.
In this case we'll likely see a 5 wave expanding diagonal form where wave (5) will be an WXY structure that will likely end at that upper Gann line near 4300. Possibly even as high as 4500!
This scenario seems less likely to me but the idea of exploding up to 4500 only to ultimately collapse feels like something Mr. market would do to us right?
הערה
Look at the chart in the update above that I posted 6 months ago... nothing surprising about this push to 4400 except for the pace. There's no bull market here. We may push as high as 4500 as I originally opined back in Jan, but that'll be it. Remember back in Dec 21 when everybody knew the Fed was raising rates and the market still kept pushing up? Same nonsense here... all the so called bullishness is based on potential rate cuts yet the Fed just literally told you they're gonna continue to raise rates.
Same shit, different year.
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