LT wave for April

Markets are going through another significant downswing. Volatility has been high compared to what traders got used to in 2017. This was of course inevitable, and it is something I was watching as an indication that we are getting into the late stages of a multi-year bull market. See: Updated long term scenarios and charts.

So, what’s next? Here is the current Nasdaq chart:

^COMP (Daily) 6_14_2016 - 3_29_2018

The long term blue trend line in Nasdaq is clearly broken. But the Nasdaq is still in a higher highs and higher lows sequence, so it’s too early to declare the end of the bull market in this index.
The Earl (blue line) is turning up from a major low. The slower Earl2 (orange line) is still dropping fast, but well into bottom territory. The MoM indicator has fallen into the blue pessimistic zone (<-5), where major buying opportunities are usually found. Once the MoM turns back up we will have a nice setup to do some cautious buying here.

If major indexes drop below their February lows, then more bearish scenarios would gain traction. That wouldn't rule out new record highs later on, but it would probably push them further back in time.

Our lunar cycle has been on fire so far this year, so that's something to keep an eye on as well. A new green period starts later this week, so it will be interesting to see if it keeps rolling on: lunar cycle tracking page.

Our LT wave did a decent job for March. The peak early in the month came with several days delay, but the subsequent weak period ended on target at March 26.
Here is the LT wave for April:


There are no outstanding peaks or lows in the projection for April, which suggests volatility will drop. We see a period of mild weakness until the 12th, followed by a more positive bias for the remainder of April. The lowest LT wave value comes on the 4th, and there is no daily peak value worth talking about.
If the wave holds up then I would look for a low in the first trading days of this week, but probably not a major new low. And then a very gradual recovery that could lift the S&P 500 back to near the 2700 area.
Let’s see.

By Dan

Author of LunaticTrader and Reversal Levels method. Stock market forecasts based on proprietary indicators, seasonal patterns and moon cycles.


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