Markets have continued to trade in “painless” fashion, just grinding higher without corrections worth talking about. Naturally this will not continue forever and it may end sooner rather than later. Here is the current Nasdaq chart:
The latest all time highs came just before christmas. As long as the blue trend line stays intact there is no problem, but once it gets broken a significant correction will be highly likely. The Earl indicator (blue line) has turned down again, indicating a downturn may have started a week ago. The slower Earl2 (orange line) has been weakening for several month already. This is still not a setup that wants me to do more new buying. The risk/reward ratio is just too poor here.
After weak performance for November our LT wave for December has been close to perfect. Here is the LT wave for January:
Expected weakness until Dec 5 was right on the mark and followed by a market advance throughout the expected strong period until Dec 22. Weakness in final week came true as well. Doesn’t get much better.
For January the LT wave projects strength until around the 10th followed by weakness for the rest of the month (with some possible bounce around the 20th). Highest LT wave value comes on the 7th with the lowest coming on the 25th. If we do not see new record highs in the first 10 days of the month then the bull run may be over and the rest of January could be down sharply. We really need to watch the long term trend line (see chart above) in that case.
Great stuff here!
I saw your tweet re: ELC – and I agree; Its hard to predict a crash, but a real correction is something we can guesstimate at the very least and that seems to be the signal.
A move to 2450 is not out of the question and it would be well within the norm in a non-manipulated and real price discovery market. The question is whether that is the market that we are in …
The ELC is still climbing for S&P 500. It will normally turn down within days of a peak. But we can have a correction and then climb to new highs by the end of the year or even in the coming years. I will do an article bringing together the elements I am looking at.