I watch too much CNBC. It is on most of the day and, most of the time, I find it annoying. Rah-Rah-equities-equities-gotta-buy-some-equities anybody would think that Jeff Immelt had told them all to gee up the stock market – tsk-tsk – put that tin-foil Hat away.
Anyway almost every guest I see on the show is pretty consistent. They all think that the market is going to climb back up again, and eventually get back to new highs. Even the previously Bearish guys are now bullish (“You can’t fight the Fed”, “Unprecedented Liquidity”, etc). Its almost like Buzz-Lightyear was running his own newsletter where all the indices are going to infinity.
This across-the-board bullishness is the only thing that keeps me as a bear.
Portugal was Downgraded this morning. Greece is going cap-in-hand to the IMF. Spain, Portugal, Ireland, Italy and the UK will likely follow. Sovereign defaults will ripple rapidly into a breakdown of the Financial system and yet the stock Market continues its resilience. The Major Indices have been rising on pure liquidity and technical levels, since last July. Fundamentals left a long time ago. Once the liquidity goes and the market returns to a sensible level it should be rapid, however it does not need to happen soon. I’ll continue to do the Elliot Wave counts to help me understand when it is likely to happen. Today we had a drop of 0.48% on the Dow and 0.55% on the S&P500 – yipidee doo – not worth writing home about. Saying all that – today was an inside day.
An Inside day! Whats that? I hear you ask. It is a candlestick formation that occurs when the entire daily price range for a given index falls within the price range of the previous day. Inside day can be very useful for spotting changes in the direction of a trend.
An what does it mean? An inside day is often used to signal indecision because neither the bulls nor the bears are able to send the price beyond the range of the previous day. If an inside day is found at the end of a prolonged downtrend and is located near a level of support, it can be used to signal a bullish shift in trend. Conversely, an inside day found near the end of a prolonged uptrend may suggest that the rally is getting exhausted and is likely to reverse.
UltraBear View
The top probability count is that we completed Wave B of Z yesterday, which would mean a significant B wave down, followed by a C wave up to a new high, or a double top. Primary 3 down would then follow.
The next Alternative is that we completed Primary 2 yesterday with a wave 5 extension of c of z. We should now start to see some major declines.
Summary of the Fall and Rally is:
Bear Supercycle Updated
Ultra Bull View
Nothing changed on this count. Market will continue to melt-upwards in the wave 3, until the Fed cuts back on liquidity in two thousand and never.
Daily Chart updated
And the Supercycle Chart
