I’ll ask again – are we there yet?

Last weekend, I made a case that a major high was near in the US stock indexes such as the Dow, S&P and Nasdaq.  That was a pretty timely call!  For lo and behold, in overnight trading on Wednesday morning, that was precisely what it looked like as I switched on my PC and saw the Dow was off 100 pips.  As I write, it has plunged further by 400 more pips.

This is what I wrote on the weekend: I have been bullish the US indexes for some time but now I am actively looking for a place to take profits and reverse positions.  Sentiment is getting off the wall – a recent forecast for the Dow of 1000,000 – 150,000 has just appeared.

And that opportunity to reverse my stance from bullish to bearish was presented late Tuesday/early Wednesday.

Here is a review of some of my risk on/risk off indicators:

Naturally, VIX has spiked up from its somnolent state

and the for the first time for a while, Junk Bonds HYG followed stocks down and not Treasuries up

and here is the T-Bond chart

With falling shares and the divergent moves in risky junk bonds compared with investment grade AAA-rated Treasuries, that was a mammoth risk-off day.

Last weekend, I covered the Nasdaq and wrote that the market was about to hit the upper tramline and then start a decline.  That is precisely what it did….

• …..with a vengeance.  The next support to go is the lower tramline and when that occurs, my major first target is the 5300 area.
• The Nasdaq is now trading where it was on 27 April after making its high on Tuesday, so it took sixteen days to reach the high and only two to get back to ground zero!  That is why they say markets climb the stairs slowly but fall out of the window fast.

Of course, with no ‘obvious’ catalyst for the sell-off, the MSM rustled through their files marked “Stories to tell the public when markets go down when I can’t think of an obvious reason” and came up with a doozy.  Something about what President Trump did or did not say to the ‘Russians’.  Funny, it’s always the Russians.

I’m sorry but all of these stories, which are probably fake, are aimed with one end in mind – to undermine Trump’s authority by the Washington elite.  I am wondering if he has any friends in Washington at all if you read the MSM.  Remember, I only read it for entertainment purposes – and for assessing social mood sentiment.

But I have no doubt that his travails, which seem to be hardening, will accompany stock market declines and they both reflect downturns in bullish sentiment that had become over-extended.

And here is gold, which is a flight-to-safety market

The other timely call last weekend was in gold.  I asked if the lower blue trendline would hold – and it certainly did.  But now the market has hit the important Fib 62% resistance and is the moment of truth.

My best guess is that it will back off from here, but the wave labels are somewhat unclear and I have no firm price forecast for the medium term.

If you are not a member of my VIP TRADERS CLUB, you may have missed these fabulous moves.  But my members didn’t.  I gave them clear instructions early Wednesday when I sent out my Trade Alerts. But there is plenty more to come, and so I invite you to join us for some very exciting rides this summer.  Details how to join here.