12:17pm EST: Per the projection a few days back, SVXY [and the market] look to be positioning for a very short term low before striking to a new all time high zone. SVXY 50ma daily lies at 55.77 which is 2% lower than current intra-day- so watching that zone seems appropriate. Look out after a new high happens. Potential reversion back to May 2021 lows and possibly November 2020 price zone before the next leg up initiates.
Unimpressive market price advances vs. moderately impressive weekly breadth declines often precludes a pull back. The red curve printed from 2019 on the MACD looks parabolic though a data analysis of the plot has not been conducted. Parabolic moves, especially of this size, do not end well when they hit a tipping point
See: the lower chart on this post for additional observations
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My reading is that fed will announce tapering next week (ECB already announced) and mostly likely some tax hikes will pass, so market is already pricing them in before the retail investors can react. Something similar to mid-feb decline for growth stocks before retail investors can book long term capital gains tax.
ReplyDeleteVarun: Thank you for that thoughtful observation. Often times there are events that coincide with each other to become the catalyst for a move that is already set up, as you say. A primary focus on pattern developments and breadth data removes surrounding events from the equation but the simultaneous 'arrivals' do not go unnoticed even though they are not actually what got the market to that point overtly. The market can butcher the best and most detailed analysis but the odds do go down of a failure if historical examples support an observation that's repeated over the long haul. Stuart.
DeleteThank you for your reply. Right now indexes are down 3% from ATH. Your projection is that first we get a new ATH, followed up mean reversion to May'21 or Nov'20 then again a new ATH?
DeleteVarun: That is correct- the 'best fit' for all of the parameters at various degrees is how we create a possible projection pattern going forward. The market will move by it's own volition regardless as there are always alternate possibilities in a developing sequence. Expectation is that a new high about 1% above the current all-time high might be sufficient to complete the current leg. A moderately large reversion could occur soon after and then another leg up to a terminal top somewhere potentially next year. The market seems to almost always do more than expected in more time than anticipated so patience and focus is required. Stuart.
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