The Great Bear is coming out of it's 87 year hibernation

[Buck Naked]

Much appreciated and well communicated response.

If you were trying to arbitrage relative pricing errors between indexes, that would be the kind of behavior that keeps their movement in line with each other. However, if you can reliably forecast a large price fall across the stock market, it is equivalent to saying that all of them are mispriced (specifically, all of them are too expansive).

It has been shown that on average, +/-75% of all stocks move up with the market, and +/-90% move down with the market, although price movements of individual stocks are usually more erratic than those of the averages.

Of course, there seem to be cases where people won't take advantage of this as you pointed out, or where not enough money is put into doing just that. On the other hand, the point is that if enough money is put to take advantage of it, their prices would fall sooner and the forecasting power you had would be undermined.

A case such as that could work for an individual stock and more difficult for a particular index financial instrument if chosen and timed well, but not for the market as a whole. For the market as a whole, one would have to assume the trading world charts EW and gives it enough weight(importance) in order to counter it. With all the various speculative theories, tools, fundamentalists, economists, forecasting methods, etc, running around, it’s implausible all the individuals will drop their methods, tools, education and beliefs for an wave that appears once every 50-100 years that they may or may not have put in the effort to figure out. Maybe some or perhaps even many recognized the large cycle wave, but they would have to be more powerful and work in tandem against the mass market itself, which is improbable.

The issue is not that I really believe in market efficiency. I don't. The issue is in part that your suggestion seems simple enough to implement that I don't see why it would still work.

I don’t understand what you find simple. The main point of my forecast using EW is that market sentiment is approaching the largest 50-100 year cycle downturn. Knowing this is not enough to succeed in trading or investing. The form of EW reflects the progress not necessarily of each man or company but of mankind as a whole and his enterprise. One will still have to choose the financial instrument and in the case of shorting, time it. None of which EW will have any practical value.

All I know is that you point to long term wave-like patterns in stock market prices. It might have some tricky aspects to implement, but I don't see how even an average person wouldn't understand the gist of it. More to the point, I have a hard time seeing how you would pick up these kinds of things, but not enough hedge funds would pick it up to kill your forecasting power.

You keep making this point or steering towards it. You seem to think I’m advocating that EW is some kind of trading panacea. As a mass psychological phenomenon, the market averages unfold in EW patterns regardless of the price movements of individual stocks. While EW principles has some application to individual stocks, the count for many issues is often too fuzzy to be of great practical value. With regard to individual stocks, other types of analysis are probably more rewarding than trying to force the stock’s price action into an EW count that may or may not exist. There is reason to this. EW broadly allows for individual attitudes and circumstances to affect price patterns of any single issue and, to a lessor degree, a narrow group of stocks, simply because what the EW principle reflects is only that part of each man’s decision process which is shared by the mass of investors. In the larger reflection of wave form, then, the unique circumstances of individual investors and individual companies cancel each other out, leaving as residue a mirror of the mass mind alone.

Like Mr Elliott would say, the track is fast, but not which horse is going to win.

Absent conclusive evidence that it worked in the past without cherry-picking and hindsight bias, that argument makes your argument hard to swallow.

An important aspect of EW is that it allows one to demonstrate its evidence of the past. Unlike charting out long term historical economic fundamentals where similar conditions have behaved differently depending on the direction of the trend, EW evinces dumbfoundedly similar behavioral characteristics throughout all degrees of waves, which can be charted and verified throughout it’s historical record.

The future is not as precise and a whole other can of worms.

 

[Buck Naked]

The academic literature on active management offers pretty dim conclusions. The vast majority of those funds are not better than a passive investment, enough so that you could make a genuinely solid case that successful managers only exists because you have enough people trying that you're bound to draw a few good decades-long runs. It's a perfectly sane opinion to have. Nassim Taleb's coin flip argument is a laymen's version of that view.

A more nuanced point of view is that if you assume there are big hurdles to making good forecasts, you end up with a potentially very narrow set of people who can profit from inefficient pricing patterns. This would make the aforementioned tests have poor power against the null hypothesis that active management is useless. The first view looks less good when you dig into some detailed descriptions of various events or the fact that the best managers all miraculously happen to be extremely sophisticated and smart: Jim Simons, Edward Thorp, Warren Buffet... They all did different things, but there is no doubt they're inordinately smart and work with other smart people all year round to turn a profit.

When I talked about a prior, I was talking in the sense of Bayesian statistics. Every time someone tells you something works in investment, you should assume it doesn't until they show you extremely compelling evidence to the contrary. And if they didn't do their homework, the next best thing is asking whether it's plausible not enough people picked up on what they see.

Well written and I agree with all you stated. I just think you’re missing my point for the use of EW principles to gauge mass market sentiment and confusing it for practical use of forecasting for individual financial instruments. Which is probably due to my lack of elucidation as others seem to have misconstrued my forecast too.

I also happen to have a B.Sc. and M.Sc. in economics and currently study and do research as a Ph.D. student in economics, so I read my share of academic papers. I read some on macroeconomic theory, others on asset pricing, but most of what I read in the past two years focus on forecasting and estimation problems.

Well done, keep it going and never stop learning.

I also looked outside the more mainstream economic type of paper such as those involved agent-based simulations.

Very interesting, but why are you giving me such a hard time about simplicity of EW when the Fibonacci sequence is the mathematical basis behind EW principles and implemented in agent-based simulations. EW should be right up your alley or at least stimulate an interest to delve deeper into the mass psychology of it as based through Fibonacci.

Plato, in his Timaeus, considered phi, and the Golden Section proportion, “the most binding of all mathematical relations, and considers it the key to the cosmos”. Da Vinci attributed great meaning to the golden ratio, he also found it pleasing to the eye, and said, “if a thing does not have the right look, it does not work”.

 

[Buck Naked]

If I knew that the market could fall dramatically next month, a very good idea would be to buy way out-of-the-money put options on an index maturing next month.

The current price for the spdr s&p 500 etf trust is $309. If one believes the price will eventually reach $250 at a point in time somewhere until July 30, 2020, what strategy for OTM options would you implement?


This isn’t a test of you abilities or anything of the sort, but an example to discuss whether or not the feasibility of buying OTM options is practical when one can’t narrow down a drop in price to a month or three.

 

[Buck Naked]

This post and the next are an explanation of the 'Chart 3 Ending Diagonal closeup' and how I determined it to be. This is for Elliott Wave Principles enthusiasts, which probably don’t exist here at DP, but may stand as a record or education none the less. Please note, you’ll need a basic understanding of Elliott wave Principles and it’s terminology to understand.



What is a DIAGONAL as defined by Elliott wave Principles?

It is a motive wave, but not an impulse. No reactionary subwave fully retraces the preceding actionary subwave and the third subwave is never the shortest. However, it is the only five wave structure in the direction of the main trend which wave four almost always moves into the price territory of wave one and which all the waves are 3’s, making an overall count of 3 3 3 3 3. The diagonal pattern substitutes for an impulse at only two specific locations in the wave structure.

Those two specific Diagonals are called, ‘Ending’ and ‘Leading’. I will focus on the on ‘Ending Diagonal’ since it’s the pertinent wave pattern of my Elliott wave count.

What is an ENDING DIAGONAL?

It occurs primarily in the fifth wave position after the preceding third wave has gone “too far too fast”, as Mr. Elliott stated it. It also occurs rarely in the ‘C’ position of ABC formations and as the final ‘C’ wave in double or triple threes. In all cases, they are found at termination points of larger patterns, indicating exhaustion of the larger movement.

Below, the final five waves converging represents an Elliott Wave ‘Ending Diagonal’.



Below, ‘Intermediate degree Wave 5 Ending Diagonal’, is the DJI chart where the box represents the proposed ‘Ending Diagonal’



Below, ‘Chart 3 Ending Diagonal closeup' is a current and closer view of the ‘Ending Diagonal’.

 

[Buck Naked]

There are rules and guidelines which govern an ‘Ending Diagonal’;

RULES;

1 - It ALWAYS subdivides into five waves.

2 - An ‘ending diagonal’ ALWAYS appears as wave 5 of an impulse or wave C of a zigzag or flat.

3- Waves 1,2,3,4,5 ALWAYS subdivide into ‘zigzags’.

4 - Wave 2 NEVER goes beyond the start of wave 1.

5 - Wave 3 ALWAYS goes beyond the end of wave 1.

6 - Wave 4 NEVER moves beyond the end of wave 2.

7 - Wave 4 ALWAYS ends within the price territory of wave 1.

8 - A line connecting the ends of waves 2 and 4 converges towards or diverges from a line connecting the ends of waves 1 and 3.

9 - If the lines converge, wave 3 is ALWAYS shorter than wave 1, wave 4 is ALWAYS shorter than wave 2, and wave 5 is ALWAYS shorter than wave 3.

10 - If the lines diverge, wave 3 is ALWAYS longer than wave 1, wave 4 is ALWAYS longer than wave 2, and wave 5 is ALWAYS longer than wave 3

11 - If the lines diverge, wave 5 ALWAYS ends beyond the end of wave 3.

GUIDELINES;

1 - Waves 2 and 4 each USUALLY retrace .66 to .81 of the preceding wave.

2 - Within an impulse, if wave 1 is a diagonal, wave 3 is LIKELY to be extended.

3 - Within an impulse, wave 5 is UNLIKELY to be a diagonal if wave 3 is not extended.

4 - If the lines converge, wave 5 USUALLY ends beyond the end of wave 3. It’s a ‘Truncation’ if it fails to do so.

5 - If the lines converge, wave 5 USUALLY ends at or slightly beyond the line that connects the ends of waves 1 and 3. It’s a ‘throw-over’ if it ends beyond the line.

6 - If the lines diverge, wave 5 USUALLY ends slightly before reaching the line that connects the ends of waves 1 and 3.



Now let’s see how the ‘Ending Diagonal’ applies to the rules and guidelines;

Rule 1 - Yes
Rule 2 - Yes, this position is wave 5 of an impulse of the Intermediate degree wave(in purple).
Rule 3 - Yes for waves 1,2,3,4. Wave 5 is ongoing, but currently a Yes.
Rule 4 - Yes
Rule 5 - Yes
Rule 6 - Yes
Rule 7 - Yes
Rule 8 - The lines converge.
Rule 9 - Wave 3 is ALWAYS shorter than wave 1,Yes; Wave 4(-7.52%) is ALWAYS shorter than wave 2(-7.55%),Yes; And wave 5 is ALWAYS shorter than wave 3, Ongoing, but
currently a Yes.
Rule 10 - Lines do not diverge.
Rule 11 - Lines do not diverge.

Guideline 1 - No for Wave 2 as it only retraced about 38%; Yes for wave 4 as it retraced about 76%.
Guideline 2 - Wave 1 is not a diagonal.
Guideline 3 - Wave 3 is not extended, therefore, wave 5 is UNLIKELY to be a diagonal.
Guideline 4 - Lines converge. Signaling that wave 5 USUALLY ends beyond the end of wave 3. Yes; A ’Truncation’ is invalidated as it surpassed wave 3.
Guideline 5 - Lines converge. Signaling that wave 5 USUALLY ends at or slightly beyond the line that connects the ends of waves 1 and 3. However, Rule 9
invalidates this guideline as it would have to break Rule 9 in order to reach line 1-3.
Guideline 6 - Lines do not diverge.


Currently all rules are satisfied.

What will it take for my forecast to be incorrect? What will it take to invalidate the ‘Ending Diagonal’ pattern?

If price surpasses $28127, then the ‘Ending Diagonal’ pattern is invalidated in it’s strictest sense.

However, as any good trader knows, one must assume to be incorrect and plan/strategize on how to take corrective measures. I will share that strategy if price surpasses $28127.

 

[TheEconomist]

The current price for the spdr s&p 500 etf trust is $309. If one believes the price will eventually reach $250 at a point in time somewhere until July 30, 2020, what strategy for OTM options would you implement?


This isn’t a test of your abilities or anything of the sort, but an example to discuss whether or not the feasibility of buying OTM options is practical when one can’t narrow down a drop in price to a month or three.

There is a windowing problem, as you pointed out. However, nothing forces you to put all your eggs in one basket by buying put options on this ETF that all expire, say, in mid-January because you think the fall is likely to happen in mid-January. You can also buy some options maturing earlier and others maturing later to spread your bet. Obviously, that kind of idea makes sense if you can get a sufficiently tight window. Moreover, as I pointed out earlier, it has a very convenient property: your loss is bounded from above by the exact amount you paid for those options. That's why I suggested put options and not shorting the stock. Of course, I didn't run the numbers, so I have no clue if this idea would make sense for a small Joe or if you would need to be big to make it workable. I also never traded options, so I don't know how easy it would be to get the right maturities to spread around your bet like that. In the advent that you don't get what you need, being Big would make a huge difference -- you can always take a clue from Black-Scholes-Merton and make your own options.

 

[Buck Naked]

Over the past two weeks, I’ve been buying gold. 35% of my investment portfolio is now in physical gold and secured at about an average price of $1500;
Todays spot price is +/-$1478, FYI

I’ve added another 10% of my portfolio in Ethereum at $148
I’ve added another 10% of my portfolio in Bitcoin at $7340

 

[Buck Naked]

There is a windowing problem, as you pointed out. However, nothing forces you to put all your eggs in one basket by buying put options on this ETF that all expire, say, in mid-January because you think the fall is likely to happen in mid-January. You can also buy some options maturing earlier and others maturing later to spread your bet. Obviously, that kind of idea makes sense if you can get a sufficiently tight window. Moreover, as I pointed out earlier, it has a very convenient property: your loss is bounded from above by the exact amount you paid for those options. That's why I suggested put options and not shorting the stock. Of course, I didn't run the numbers, so I have no clue if this idea would make sense for a small Joe or if you would need to be big to make it workable. I also never traded options, so I don't know how easy it would be to get the right maturities to spread around your bet like that. In the advent that you don't get what you need, being Big would make a huge difference -- you can always take a clue from Black-Scholes-Merton and make your own options.

It appears we don't have much to discuss.

 

[Buck Naked]

This trade is for the options’ guys.

I didn’t desire to post more complicated trades and wanted to keep it simple for the average retail investor, but since The Economist has mentioned options as a tool to profit on forecasting large moves with limited risk, I have decided to post this trade since it was screaming at me and may be interesting for some to see how a Long Put Option plays out. Now, “large moves” equate to different meanings to different people. For this trade, a “large move” to me means a drop of around 10% over a timeframe of a week which is horribly a risky forecast to make, however, as The Economists has pointed out, options dramatically limit that risk.

In this case, I have identified a Long Put Option Contract that involves very little capital for potentially very large gains. One worth taking since it lines up with my short term analysis(not posted). The question remains if I’m timing it correctly. Since it involves so little capital, I have entered into the trade.

I won’t go into into details or reveal how many contracts I bought, but for demonstration purposes you can assume I bought 10 contracts(1000 options) which any retail investor should be able to afford/risk.

TRADE:
I bought 10 SPY(SPDR S&P 500 ETF TRUST) LONG PUT Contracts at $.21 at the near end of the trading day yesterday, December 9th, 2019 with a strike price of $295.00 and an expiration date on December 16, 2019.

Entry cost = $210.00
Max risk = $210 at a price of $312.50 at expiry
I’m targeting the $285.00 area, but could get out earlier or remain later depending on how new info is revealed.

 

[Kushinator]

Entry cost = $210.00
Max risk = $210 at a price of $312.50 at expiry
I’m targeting the $285.00 area, but could get out earlier or remain later depending on how new info is revealed.

The option is currently trading @ $0.06. You really have no business giving people investment advice.

 

[Winchester]

The option is currently trading @ $0.06. You really have no business giving people investment advice.

Anybody who takes investment advice from some random person on the internet really shouldn't be investing. Anybody who believes they can time the market shouldn't be investing either.

 

[TheEconomist]

Anybody who takes investment advice from some random person on the internet really shouldn't be investing.

It depends on what you mean by taking investment advice. If you have in mind the most extreme reaction possible of picking up a strategy someone wrote down on some forum and actually putting money down on it, it's probably a very bad idea. However, nothing forbids you to take in suggestions, as long as you conduct research properly.

Anybody who believes they can time the market shouldn't be investing either.

I helped build a database on investment firms in Canada a few years ago. I surveyed the websites and pamphlets of about 220 of them. I couldn't always get a straight answer with regards to their investment strategy, but I'd say well over a third of them were engaged in an active management strategy. This essentially means they do not buy the efficient market hypothesis and believe they can respond to changing conditions with enough speed and precision to beat a passive strategy after fees. It would be fair to say that not all of them will manage to swing that, but they are investment professionals who'd argue you are wrong.

My personal advice on this is to assume the market is efficient and put the bar absurdly high for accepting proof to the contrary. That means if you cannot thoroughly backtest a strategy, just don't play that game. A passive strategy is really, really hard to beat. A large part of that is the difficulty of timing market movements well enough, but it's also about transaction costs and taxes (and possibly hefty management fees if you do not do it yourself) that constantly chip away at your wealth. If you don't trade a lot, you start with a huge leg up.

 

[Buck Naked]

The option is currently trading @ $0.06. You really have no business giving people investment advice.

I’m not giving investment advise, so your concern is misplaced.

Investment advise should be tailored to an individuals’ situation, needs and financial goals. I am doing none of that here for anyone.

 

[Buck Naked]

Anybody who believes they can time the market shouldn't be investing either.

Don’t all investors enter a market because they think they can time it? Sorry, but that is a strange comment, after all, one doesn’t buy into a market thinking it’s going to move in the opposite direction they’re betting on, right?

 

[Buck Naked]

It depends on what you mean by taking investment advice. If you have in mind the most extreme reaction possible of picking up a strategy someone wrote down on some forum and actually putting money down on it, it's probably a very bad idea. However, nothing forbids you to take in suggestions, as long as you conduct research properly.



I helped build a database on investment firms in Canada a few years ago. I surveyed the websites and pamphlets of about 220 of them. I couldn't always get a straight answer with regards to their investment strategy, but I'd say well over a third of them were engaged in an active management strategy. This essentially means they do not buy the efficient market hypothesis and believe they can respond to changing conditions with enough speed and precision to beat a passive strategy after fees. It would be fair to say that not all of them will manage to swing that, but they are investment professionals who'd argue you are wrong.

My personal advice on this is to assume the market is efficient and put the bar absurdly high for accepting proof to the contrary. That means if you cannot thoroughly backtest a strategy, just don't play that game. A passive strategy is really, really hard to beat. A large part of that is the difficulty of timing market movements well enough, but it's also about transaction costs and taxes (and possibly hefty management fees if you do not do it yourself) that constantly chip away at your wealth. If you don't trade a lot, you start with a huge leg up.

I agree a passive strategy in the stock market has been and is very difficult to beat. I have largely practiced a passive strategy my entire life in the stock market, but I believe through all my research, backtesting(but not in the way you think and practice it), practice and experience that now is not the time for me to be passive. I think the upcoming market correction will be too deep and too long to remain passive through it.

On the other hand, if I were in my twenties, I most likely would maintain a passive strategy and just add to it consistently.

Each investors strategy varies according to their age, goals, needs, etc.

 

[Kushinator]

I’m not giving investment advise, so your concern is misplaced.

Investment advise should be tailored to an individuals’ situation, needs and financial goals. I am doing none of that here for anyone.

All of your predictions have gone to ****.

 

[Buck Naked]

All of your predictions have gone to ****.

None of my predictions have even come remotely close to the date where one could say they have gone to ****. Pay attention.

 

[Buck Naked]

Just for the record,

Sold all Ethereum(ETHUSD) at $280-283

Sold all Bitcoin(BTCUSD) at $10200-10300

 

[Buck Naked]

For the record.

Rebought Ethereum at $240-242 with all I sold on February 14th

Rebought Bitcoin at $9200-9300 with all I sold on February 14th

 

[Buck Naked]

For the record,

Today I traded 50% of my Bitcoin holdings for Ethereum at an ETHBTC price of 0.0257.

I’ve added another 15% of my total investment account on Ethereum at $220.

My analysis and research, which I won’t share, projects a large price move up(minimum 2.5X) for Ethereum over the next 30 days. Ethereum will dramatically outperform Bitcoin too.

I can't rule out a short lived spike down before the move up, but the probabilities are low.

 

[Ahlevah]

I want a bear market. P/E's are out of whack.

It depends. If you want to invest in Tesla or Virgin Galactic, I agree. On the other hand, some value stocks are being priced for the clearance bin. A good example is companies in the petroleum industry. I already own stakes in ConocoPhillips and EOG Resources and recently bought shares of two European oil companies, Royal Dutch Shell (the British version) and the French company Total. Total, for example, has a P/E of 10 and a P/CF of less than 4, which is ridiculous. The company also pays a 6.70% dividend. And anything travel or entertainment-related is in the doghouse thanks to coronavirus. For example, the hotel REIT Park Hotels and Resorts, which was spun off from Hilton Worldwide in 2017, is being tossed out like it's garbage, which it most certainly is not. Just as Amazon.com was supposed to put Target and Best Buy out of business, the scuttlebutt is Arbnb is the death knell for lodging firms. I don't think that's the case. Park owns a portfolio of higher-end and luxury hotels in the United States, Puerto Rico, and Hawaii. Last year this company bought another hotel REIT for $2.7 billion, and yet the whole company today is valued at $4.4 billion. Its enterprise value exceeds $8 billion. It has a tangible book value of $24.41 per share, but it closed Friday at $18.26. The stock also yields almost 10%. Cruise lines are another example. Carnival Corporation, for example, has a P/E of 7.74 and yields 5.98%.

And, you know, every time something comes along to shake up the financial markets, the Chicken Littles come out of their coops to tell us to sell everything because the sky is falling. How many of you all remember Howard Ruff? Does the name James Dines ring a bell? Joseph Granville? Robert Prechter? Marc Faber? All of these guys got rich selling investment letters touting gloom and doom. Recently, I saw Nouriel Roubini on CNBC again. Before that I hadn't seen that guy since the last financial crisis.

I'm guessing the volatility we're seeing isn't over yet, but no one is going to panic me into selling everything, especially since reason and common sense tells me there's still value in this market.

 

[Buck Naked]

What I'm forecasting in general.

The DJI will nosedive AT LEAST 38%(to $17000) by the first half of the year 2020.
A Bull Trap will form after the nosedive completes.
The DJI final low will be somewhere between $13000- $5000.

*Please note that you’ll have to understand Elliott Wave Principles and its terminology to understand my post.
*Please note this is not financial advise. Don’t be an idiot and make trades based from some random guy on the internet.


The All Time High completed at 29568.6 on the DJI. The Fourth Wave of the Cycle degree has begun, which is on the chart in the OP and labeled and projected as Wave IV in the color magenta. This is a 50-100 year Corrective wave, which will be comparative in magnitude to the Second Wave of the Cycle degree from 1929-1932. It could take anywhere between 3- 20 years to complete, depending on whether it’s a sharp correction or a sideways correction and whether if it is indeed the Fourth Wave of the Cycle degree or the completion of the Fifth wave of the Cycle degree and the start of a Supercycle degree correction.


A Corrective wave is comprised of only three waves, labeled A B C.

No market approach other than the Elliott Wave Principle gives a satisfactory answer to the question, “How far down can a bear market be expected to go?” The primary guideline is that corrections, especially when they themselves are fourth waves, tend to generate their maximum correction within the span of travel of the previous fourth wave of one lessor degree, most commonly near the level of its terminus.


Now a simplistic, generalized expansion of my three forecast components and, for entertainment, how the US masses may describe/believe the causes of the stock market fall over the next roughly five years as well as a few meaningless, crystal ball-like predictions.

The DJI will nosedive AT LEAST 38%(to $17000) by the first half of the year 2020. “

This is Phase One. The stock markets will fall by July 1st, 2020(probably sooner rather than later) to somewhere between the Fibonacci levels of 0.382($18400 DJI) and 0.618($11400 DJI) as measured from the July 1st, 1932 low on the DJI chart to the ATH on February 3rd, 2020.(I’m choosing the DJI as one example, but all stock markets will fall to between their 0.382-0.618 levels, respectively)


My thoughts: The masses in general, media, financial pundits, government, etc, will blame, widely except, and/or describe the cause of this phase markets’ fall on the coronavirus as they have already begun too. Although the coronavirus may be considered as a trigger for the fall and even considered as a partial cause of the fall, it cannot explain or be the main reason/cause for such a correction of this upcoming magnitude. The underlying driving force is of human behavior along with it’s link to the Natural world and how the magnitude of market reaction is reflected depending on where the trend is and to which degree the trend is in market behavior.


Examples:


1- The Black Death of 1346-1353, killed an estimated 75 to 200 million people in Eurasia. Here, the European markets increased in price throughout the period because the trend in human behavior was at the beginning of a Wave 1 Cycle degree bull trend.

The Great Depression Ahead: How to Prosper in the Crash Following the ... - Harry S. Dent - Google Books







Continued...

 

[Drawdown]

Fed just announced about 10 minutes ago it is flooding the market with cash

 

[Buck Naked]

2- Spanish Flu of 1918-1920, killed an estimated 17 to 50 million people. Here, as seen in the DJI chart, prices increased and decreased equally during the period because the trend was in a transitioning period between completing a Intermediate degree bull trend and a Primary degree bear trend.

3- Asian Flu(1956-1958), SARS Outbreak(2002-2004),Ebola Outbreak(2014-2015) and HIV/AIDS Pandemic(1980’s-today). Here, as seen in the DJI chart, prices were overall increasing throughout all periods because the trend was in a Cycle degree bull trend from 1932- 2020.


Today, with the Coronavirus pandemic, we are seeing market price reaction stronger than during other pandemics because the trend has just entered its IV wave correction of the Cycle degree which will be the largest correction we’ve seen in our lifetimes. Will the coronavirus still be blamed for the correction in a few years or will the masses blame it on other causes? Well, all that remains to be seen, but the main factor of market price action is the underlying driving force of human behavior and how the magnitude of market reaction is reflected depending on where the trend is in market behavior as plotted by Elliott Wave Principles and its foundation in Fibonacci’s work as reflected in the Natural world. The Bull trend completed at $29568.6 on the DJI. We have entered a major bear market trend since that point, where wave ‘A’ is, usually but not always, where the markets fall quickly, deeply and shockingly in terms of percentage, especially if the degree of the trend is large.

This phase in EWP terms will be Wave ‘A’.

A Death Cross(a lagging indicator) in terms of technical analysis on the daily chart will occur near the end of this phase, although it will be recognized too late or towards it’s price low of the move in this phase.



Continued....

 

[Buck Naked]

A Bull Trap will form after the nosedive completes.

This is Phase Two: After the phase one market fall completes this year, the markets will bounce(move up). The move up will retrace to somewhere between the Fibonacci levels of 0.382-0.618 as measured from the ATH on February 3rd, 2020 on the DJI chart to the low of where phase one completes. This move is difficult to forecast in terms of time, however, in early forecasting uncertain terms of probabilities will take somewhere between 6 months and 14 months and is commonly, but not always, a narrow advance in terms of price action. At this point, it’s better to think of it, not as measured in 6-14 months, but in terms as an undefined phase in time.


My thoughts: The masses in general, media, financial pundits, government, etc, during the second half of this phase will declare the phase one fall over as the coronavirus scare dissipates and/or a vaccine is implemented. The masses will believe the problem solved and that the phase one market fall was just because of the effects due to the coronavirus pandemic.


Phase Two is what I’m choosing to label as the Bull Trap. Phase Two will be selective and weak, from a technical viewpoint. Traders/investors who buy here, ignoring the importance of waiting for confirmation signals will fail to varying degrees. Economic and a large percentage of individual stock fundamentals will subtly weaken during this phase and generally be ignored from the investment world, as well as by many traders and investors due to denial, inexperience and aggressive euphoria in their beliefs the markets are back on track to move up as they convince themselves the phase one fall was just a pullback pursuant to the next leg of advancement.


While Trump is President, he will blame phase one on the coronavirus(as he already has begun too) and the US media(as fake news) as if they created the panic(without mentioning the rest of the world’s media coverage of it as similar). He’ll blame the democrats(as he and supporters have already has begun too, without recognizing it as a worldwide phenomena and other governments are and have responded with much stronger measures) in any way, shape, or form he can imagine. During phase two, Trump will sell everyone the Bull Trap. He’ll claim, possibly even make, trade deals during this period and sell his BS that the markets are moving up from the coronavirus overreaction/panic and/or his trade deals(if made) and the US will have the best growth ever in the near future(as he has already begun to set up) because of his trade deals(if made or will be made if President for a second term).


This phase in EWP terms will be Wave ‘B’


The upward move peak of this phase will test the weekly 100 day Moving Average area before reversing and entering the relentless price decline of phase 3.

continued...