I’ve traded long enough to have an opinion on Elliott Wave (at least the kind proffered by our friends in Gainesville). It’s misleading/worthless/harmful in bull markets and nearly invaluable in bear markets.
The question is: what kind of market is this? Yes, yes, we’re at lifetime highs every day, so you’d think I could figure it out. All the same, what EW proposes is that we are at the top of Wave 2, at least as it concerns the Dow.
Here is their interpretation of the Dow Industrials as they stand now.
While for the NASDAQ and the S&P 500, both at record highs, they suggest they are at wave 5. Regardless, if this is true, both waves 5 and 2 are followed by hard falls.
Oh, and in case you weren’t aware that the S&P 500 and the NASDAQ closed at record highs, you need look no further than the ticker-in-chief, who is absolutely obsessed with stock market valuations as a proxy for how well ‘Mericuh is doing.
The President is absolutely obsessed with the stocks.
That might seem understandable but try to reframe it. What if he was obsessed with the price of, let’s say, copper? And he did everything in the government’s power to make copper as expensive (or cheap) as possible? That would see a bit odd, wouldn’t it?
Yet no one blinks at eye that a major part of any decisions is how it’ll affect the valuation of the Dow Industrials.
Thus – – – and this is not political animus on my part, but an obvious observation – – there is NO more powerful enemy to equity bears than the current President. He will do anything and everything in his power to keep stocks propped up, and in those instances in which the situation gets away from him for a few weeks, he will simply amplify those countermeasures. This could range from banning short selling to banning put options to compelling the Fed to push trillions of dollars of new fiat into the financial system to create a sugar high. It also includes prosecuting those like me who publish bearish ideas.
If we are in fact in a wave 2 (or wave 5, depending on the index) and are preparing to dive, then we can expect a powerful sell-off yet just as powerful as counterstrike. This probably means that for bears like me and the one or two still surviving, it is probably best not to get greedy but instead take profits swiftly, even with the fear that we may be leaving money on the table.
The experience we’ve had from March 30th to present is a potent example of this. And, frankly, even in the shortest time durations, when a tumble happens, something always shows up out of the blue to strike back, which is precisely what happened WHILE I was typing this post! This was all in the span of minutes:
Huge plunge and then……………GONE!!!
There will never come a time when any politician will simply sit down and declare that the system needs to expunge itself of excess. However, there will come a time – – like what happened in 2008 – – when even the President of the United States will be powerless to stop a massive global financial wipeout.
But, until that day arrives, they are going to fight like hell to make sure it doesn’t happen on their watch.
