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.

NASDAQ

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.

S&P 500

Has broken support and is heading for the early Feb lows: