Yes, we are there!

At major market tops, there is an explosion of opinions from pundits as to why stocks will keep going up.  It is one of my favourite indoor sports reading such drivel, although I try to limit it as my doctor has  advised me my ribs can take only so much tickling.

There is so much uneducated rubbish out there – here is one gem I came across today:

“As the market enters the home stretch, the sentiment picture is little changed. Investors are beginning to come around to the idea that equities might not be such a terrible investment idea. But most remain skeptical– and that’s good news for the market. 

Blind contrarians are a good thing for trends. Every trend needs doubters and skeptics – otherwise there won’t be anyone left to buy,” explains Ivanhoff Capital founder Ivaylo Ivanhoff.”  (Underline is mine).

First off, this guy is forecasting there is another leg to this rally (“As the market enters the home stretch“). Maybe.   Second, he has only just noticed bullish sentiment is high and people are now starting to buy stocks?   This has been going on for months, for goodness sake.

And he says high bullish sentiment is good the the market!  Wow!  Has this guy ever seen a chart such as the one I have here showing extreme II readings?  I guess not.  The only people it is good for are the bears.  We are at or near a major top.

Yes, he is correct in that every trend needs doubters and skeptics, but he is totally wrong when he says “otherwise there won’t be anyone left to buy”.  No, no, and a thousand times no.  The bulls (buyers) are in the overwhelming majority (check COT data).  Short covering by the small contingent of bears only adds a little to this buying pressure.

It is the bulls who are left with no-one left to buy here.  And with Nasdaq bulls nearly ten-to-one over the bears, this rally is running on fumes.

Anyway, I believe I have nailed the Dow top on Friday since I have a five wave down move.  I will have charts later.

GOLD

But it is gold that has grabbed my attention today.  I have been fishing for a tradable low and I found one this afternoon.

I now have five clear waves down off the October high with a small pos mom div at this morning’s low.  This completed the move down.  But the final fifth wave also has a five five wave pattern

When the market rallied to the fourth wave high, it took off like a rocket as buy stops weer hit.  You will remember that I have pinpointed this possibility as bullish sentiment has been on the floor and the short side is a very crowded trade.

This is the start of my $100-$150 rally potential and a pull-back to the upper tramline is a great place to enter – if it makes it.  But with a whole array of buy stops just up ahead starting at the $1255 area, that is one very tempting target for the stop-runners.

Even just a Fibonacci 50% retrace of the November decline would take it to the $1280 – $1290 area with higher potential after that.

I am long gold.