Stocks still advancing

In the Thanksgiving-shortened week, stock indexes remained up against their highs.  For a long time, these markets have ignored the pandemic even as it is hitting the USA very hard with rising cases and death rates – and the devastated retail and hospitality sectors.

Of course, many continue to receive their wages/salaries and with no malls or restaurants to visit, savings are ballooning with much of this new ‘wealth’ being funneled into investments of all kinds with Bitcoin being a favourite as is Tesla.  So in reality, the pandemic is actually good for shares.  Let’s have a few more and force the Tesla share price to the moon (it is almost there already)!

And here is that supreme leader in the mania department, Tesla

As it heads for inclusion in the S&P 500, front-runners to the index funds – who must buy it – have been pushing it up to new highs in a repeat of what they did to Apple just before its 4:1 stock split in August

A big surge into the date of the split and then a ‘pump and dump’ crash of 25% a month later.

Can something like this occur with Tesla following its S&P inclusion?

As I suggested a while ago, it appears any major tops will be made next year in 2021 but I believe a 2021 reversal has very high odds.  I have pointed to the extreme valuations and the extreme sentiment indicators.  We are in the final wave 5 melt-up.

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Is Crude oil heading for my $60 target?

In recent weeks, I have been covering my bull campaigns in Cocoa, Orange Juice and Coffee, but the granddaddy of all commodity markets is of course Crude oil.  Despite the stated universal (ex-China) government policy to kill the oil industry, global energy production remains 80% dependent on fossil fuels and that is unlikely to change much in the next few years.

Mix in the likely production difficulties as new well development has been suffering from reduced investment while prices have been in a general downtrend, and I can make a great bull case for prices to advance well into next year at least. 

Here is my roadmap on the daily that has guided my thinking recently

There is a lovely textbook example of the five down during the Corona Crash to the March low with a large gap about half-way down, as is typical for breakaway gaps.  And the rally off the March low set the gap up as a target which I noted in April. 

And the market responded by using the gap as a magnet that drew prices back up to the Fibonacci 62% retrace to close the gap, as is also textbook.  But instead of kicking off a major decline, it formed a three down that set up the current rally taking it now above that Fib level above $45.  That ‘surprise’ rally changed my outlook on its head  from bearish to bullish and now my next target is the Fib 76% at $52,

At that level, it would reach a major crossroads.  Moving lower off that level would likely confirm the bearish picture,  But with my more bullish analysis  above, a strong push above the $52 mark would likely confirm this picture on the monthly

I have an 18-year Wedge with five clear major waves – again textbook.  It is down-sloping and that implies a kick-off to a major bull run. The huge overshoot in March as spot prices went negative (!) was a selling climax that has laid the ground for a substantial advance with my first target the upper Wedge line around $60.

And a strong push above that would set up much higher targets with the start of the Wedge around $150 entirely possible.  Hmm.