Two nested expanding diagonals: leading or ending. Option favors ending based on timing mark 11/5 and 15th weekly negative breadth signal line printing [a record for negative divergence in time]. Also summation index [daily] at highs with MACD histogram bars declining. Prices could create a range or some other smaller oscillations including printing a new high as shown on the chart. Bottom line- looks like a turn signal down in the market is likely forthcoming. Probably will not be the terminal top which may come later on [in early '22]. If the expected decline materializes, vectors are pointing to April/May '21 price zone before a large bounce brings it back to the highs and then potentially even more upside.
Chart 1 posted around noon.
Chart 2 posted around 2:45pm
The bots will flag here when they see a top. (1/25/20, 2/20/20)
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- Terminal top next year will likely be before mid Feb, to not let retail investors cash out on long term capital gains tax. Same as it happen for Feb 2020 to Feb 2021.
ReplyDelete- Strong bull market for this year will provide good tax revenues also for government.
- Makes Biden look good for his first year performance.
Varun; Very interesting comments. A terminal top most likely will require the weekly summation index to be at some kind of highs. Currently it is only the daily that is trying to roll over from a high. The time frame with reference to taxes and politics that you highlighted does leave some of those ideas on the table. Thanks again. Stuart
DeleteRight now, big cap and cyber security stocks are at or near ATH. Other sectors like FinTech, real estate, cloud, WFH are down a lot. Whenever the terminal top occurs, do you anticipate major indexes going down gradually over months (like end of 2018) or rapidly (like 2020 covid crash)?
DeleteVarun, Great question. A 3-wave or even 5-wave overlapping decline are entirely possible. The 2020 top had some unique attributes that contributed to a fast decline- it was likely a 'c-d' leg in a megaphone [expanding triangle] which often have a very rapidly moving section for about 80% of the total drop. It also had a huge and vertical 'tail-down' on the 50ma breadth parameter in the weekly NYAD chart. Since this approaching top is likely the 'e' leg of a megaphone, it most probably will not replicate the previous decline from 2020 but it may well have attached rapid declines. Observing the turn signals attached to summation daily and weekly roll-overs [up or down] should keep the attention exactly where it needs to be while the overall pattern draws itself almost like a robot getting digital instructions. Stuart
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