Weekly Wrap – Big moves down under way
I have already pinpointed the top in US stocks which was made Friday 4 April – right in the time window that I forecast. Remember my 30-month cycle with ended Mar/April this year?
Now, markets will be falling in unison. But there is one holdout to this picture I have been concerned with – crude oil. Crude, along with copper are the two most economically-sensitive commodities. If we are in for a Deflationary Depression – which I believe we are – then all asset markets will decline more or less together.
One of them – Dr Copper made its recent high last December and is down 10% from there and falling.
But crude oil has been powering up over the $100 level again – until last Friday, that is.
However, the technical picture is painting a very bearish scene:
The latest leg up is a global tension – induced rally, pure and simple. But just look at the form of the advance:
Rally is a clear A-B-C (counter-trend)
Wave equality between A and C exists at 104.10. High Friday was 104.40 – a direct hit. After that was hit, the market fell into the close
I have five clear waves within wC – an ending pattern.
Finally, a neg mom div at the high – buying power weakening
Isn’t that pretty? In fact, it is textbook.
Incidentally, I shall feature the crude chart in tomorrow’s MoneyWeek Trader email.
If you are not receiving my free resource, you can sign up here.
I fully expect crude to join the party down to the basement from next week.
If this occurs, all markets will enter free-fall territory and the only safe asset to hold is one that everyone hates – CASH.
Many pundits are advising getting out of tech and into ‘safer’ sectors such as utilities. I disagree. No sector in the stock market will be safe during this Deflationary Depression.
There is one more market I have been eyeing for signs of a top – junk bonds:
The manic chase for yield has resulted in the narrowest of spreads against Treasuries. The MAs have diverged into the wide blue yonder. But I have a massive divergence of MACD/Price and it now looks very much that the top is in for junk – finally.
This index is leading the charge down and is fulfilling its traditional role when risk is being taken off the table.
The final rally to the top sports a neg mom div as in the crude chart and since then, the market has fallen to the shelf of support in a series of one-twos. Incidentally, this stair-step pattern is one of the trickiest to trade.
Once it breaks this shelf, my next target is the 1200 area, but it is already down 8% off its top in one week – and is down for the year.
I remain aggressively short.
Has broken support and is heading for the early Feb lows:
The rally up is in a clear five wave pattern and we are now in a wave 3 down.
I remain aggressively short. Ditto the Dow.
Has rallied to the Fibonacci 78% and tramline resistance:
and guess what I can see – yes, a neg mom div as in the other markets!
I am looking to position short again, having been stopped out at break-even last week.
Hit my first target at $1320 last week:
My Best Guess is for the market to dip and then rebound top a new high in an classic A-B-C.
I took partial profits at $1320 from the $1295 area last week.
Next week should be fun – but have a great weekend until then!