Big Picture Possibility... First Good, Then Very Bad

Scataphagos

Scataphagos

When the market broke down late last year, I became persuaded that the October top was IT, and a bear market had begun.

I was looking for the price pattern to follow through on that notion, but it didn't. Instead I had to revise my view that the December low was actually an "abc-abc-abc" 4th Wave Down from the 2016 low.

Presuming the count plays out like that... I'm looking for "5 waves up" from the December low to complete the bull rally sequence from 2009. (Wave 2 of this "last 5 waves up" could have been completed last week.)

Without going into detail, as I could be all wrong about this....The fundamental backdrop for it would be "belief in the Fed". In fact, "overbelief". (Joe Granville described the 3 legs of a bull market as, "disbelief", "belief", and "overbelief".)

There is BIG resistance at the chart highs and while it's possible the market could complete the final 5 Waves Up without significantly breaking those highs, if this scenario is correct it's more likely the market will SOAR above those highs in Fed-induced euphoria (rate cuts, QE4). That's the good news, sort of.

The bad news is that once the 5 Waves Up is completed (and Trump is going to try to make sure it isn't before the 2020 election), "that's all she wrote, folks" for this bull.... and our market/country will be in deep doo-doo with overextended debt, sky-high valuations, and little/nothing in reserve.... big bust in the making.

All just a "back burner" consideration for now, but HUGE if it turns out that way. Suggest giving it more thought if the 3x high in the Dow gets taken out in a big way.

FWIW...
 
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The problem is that nothing has changed. We did not even trade down 10% and the Fed is considering lowering rates and injecting again tons of money into the financial system. Heck, in Europe talk is about another QE program. We are living in ludicrous times where the elites are making the laws and regulations and line their pockets all at the expense of the industrialized nations' Middle class. As much as I hate it but I don't see any solution other than a "revolution" and redistribution of wealth. It's almost impossible for a market to correct meaningfully to the downside and wash out inefficient businesses when you have central banks that save each and every weak player in the market. This has nothing to do anymore with free markets or capitalism but with a rigged system hence the rise of populism.

Scataphagos said:
When the market broke down late last year, I became persuaded that the October top was IT, and a bear market had begun.

I was looking for the price pattern to follow through on that notion, but it didn't. Instead I had to revise my view that the December low was actually an "abc-abc-abc" 4th Wave Down from the 2016 low.

Presuming the count plays out like that... I'm looking for "5 waves up" from the December low to complete the bull rally sequence from 2009. (Wave 2 of this "last 5 waves up" could have been completed last week.)

Without going into detail, as I could be all wrong about this....The fundamental backdrop for it would be "belief in the Fed". In fact, "overbelief". (Joe Granville described the 3 legs of a bull market as, "disbelief", "belief", and "overbelief".)

There is BIG resistance at the chart highs and while it's possible the market could complete the final 5 Waves Up without significantly breaking those highs, if this scenario is correct it's more likely the market will SOAR above those highs in Fed-induced euphoria (rate cuts, QE4). That's the good news, sort of.

The bad news is that once the 5 Waves Up is completed (and Trump is going to try to make sure it isn't before the 2020 election), "that's all she wrote, folks" for this bull.... and our market/country will be in deep doo-doo with overextended debt, sky-high valuations, and little/nothing in reserve.... big bust in the making.

All just a "back burner" consideration for now, but HUGE if it turns out that way. Suggest giving it more thought if the 3x high in the Dow gets taken out in a big way.

FWIW...
More...
 
Scataphagos said: "The bad news is that once the 5 Waves Up is completed (and Trump is going to try to make sure it isn't before the 2020 election), "that's all she wrote, folks" for this bull.... and our market/country will be in deep doo-doo with overextended debt, sky-high valuations, and little/nothing in reserve.... big bust in the making."

My model suggests that there is no benign way out, irrespective of whether the top is a spike or a couple of years of sideways topping. Would you hold 2030-maturing I-bonds with 2.5% interest plus inflation adjustment during the crash/depression/unrest? Will Uncle Sam pay his bond holders? Or will he make your handle apply to all of us?
 
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