Quick note on Friday's closing action- the low held at (ES) 2852.0/2853.0 zone and hit 2992.0 briefly which surpassed label 4/d so watching to see if a retrace gains some traction and then focus on waiting for the next top flag as the expectation is high that more downside is yet to come. Nothing to do with viruses, news, politics- those events and the market always occur in sync or with overlaps to a large degree. One does not drive the other. Many of the charts and studies here have demonstrated the precarious set up in the market at various time-frames. Here is another to review. This one has largely been ignored but has always been sitting there (like the sword of Damocles?)-
(see chart)- Note the S&P prices moving almost exponentially at the end of 2017 with the relatively innocuous looking price drop to follow. Now look at what happened to triple inverse vix instrument SVXY (and a similar instrument XIV not shown). Quite a difference between the two declines, yes? XIV eventually got destroyed. Perhaps you recall. Now look at the 'recovery' in SVXY. It is at price levels not seen since 2013. This event was not discussed much at the time other than all the investors that got hurt in the destruction of XIV. Old news by now - not so fast, perhaps it is still relevant. What might this structure be telling us? Why has SVXY not performed a recovery in prices similar to previous advances in 2016/2017? What is different? Yes it was revised to reduce downside destruction in early 2018* and sacrifice some gain potential but still- can't quite resolve why SVXY seems to be permanently beaten down. Yes, percentage-wise it has turned a profit since Feb 2018, sort of. It could hardly be called a stellar rise while VXX (triple long VIX) has truly been pummeled (however- this week VXX has moved up rapidly!).
* SVXY now uses a factor x -0.5 instead of x -1.0 but even with that, shouldn't it show a better overall rise? Market prices had recovered to new all-time highs. Similarly, svxy in the second half of box 1 could not get ahead even when the market temporarily hit highs at the end of 2015. It wasn't until svxy exited out the bottom of the box 1 did it sufficiently correct to recover dramatically. Similar set up now? And pray tell, what if the market goes with it if/when it exits out the bottom of the box? Look at the scale of this structure. Brrrr. Feel the cooling effect. We would hope to be wrong but ignoring evidence does not help. Look at what it is doing now just with leg smaller B-C underway. Big moves will put everyone on edge and looking everywhere for answers. Staying focused on the signals is the only way to have any kind of leverage in these conditions.
Let's break it down-
Look at the three boxes: the pattern box to the left and boxes 1 and 2. There are many reasons to consider this might be a set up that needs to be watched. If box 2 is at point (large A) similar to box 1 back in 2015- there could be rough waters ahead. A megaphone that began in Jan 2018 may have the current down leg to complete (smaller C first chart), then back up to (smaller D first chart), then out the bottom of the box 2 similar to box 1. (Alternate is to exit the bottom of the box after smaller C is hit but that does not fit other supporting criteria currently being used so it remains a weaker possibility at the moment). Then we might see a real recovery in SVXY and the market that declined along with it but first however- even if this does happen, it will most likely be a multi-year event. Just reporting an observation here but there is a lot of supporting evidence for this scenario to play out. Some of the previous studies using other criteria have eluded to the strength in the current action as far as the market threats and perhaps this event should no longer be seen as having passed by into history and no longer relevant today. There seems to be much bigger structures being worked out. The market will draw it's own 'pictograph' eventually- meanwhile the appropriate behavior is to believe the established signals that have a proven track record.
The silver lining could be that another huge leg up somewhere post-exit of box 2 occurs. Interestingly- this scenario could also fit quite closely with what the well-respected Elliott Wave statistician Glenn Neely is presently forecasting for the market (the 'view video' registration request that opens is not us, it's Glenn's). He has projected higher ultimate highs towards 3500 for the S&P in the current leg. This would fit the SVXY megaphone small D higher target. The prognosis is then for a larger correction ('exit' from box 2?)- EW 4, followed by a huge leg up** to a final grand supercycle top!- EW 5 (or whatever EW people label that wave)- that would be the recovery 'arrow' up after the exit from the box. Phew! Got all that? Not necessarily all bad news! A final huge up leg to arrive somewhere in the future. Let's stay sharp (in survival mode) until then.
** note that since early 2016, we are probably experiencing a similar type of thrust to the one that might be coming 3-4 years from now- only expected to be much larger! All based on the current prognosis working out of course so keeping that hope alive for now. (could be a 15-20 year up-move from the 'exit' bottom when that arrives based on simple timing boxes). As always- there will be a report update when some change in outlook needs to be addressed so check back.
Check back for Signals:
The bots will flag here when they see a top. (1/25/20, 2/20/20)
..and possible bounces/bottoms: (2/28/20)
Our favorite go to site- McVerry Report
This information is for entertainment purposes only. Financial loss can occur from investing
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