Monday, June 15, 2020

COMPQ and SPX: Big Warning Flags for Bulls

There's an ancient Chinese curse that roughly translates to: "May you live in interesting times," and 2020 has indeed been "interesting times."

So far, we've had (among other things) a global pandemic, a market crash, and massive civil unrest.

Inside the course of only one week, our media "shepherds" went from shaming small groups of people who were breaking lockdowns because they wanted to feed their families, to cheering massive groups of people who were breaking lockdowns.

As I've written previously, one of America's struggles right now is that we (as a society) have no widely-trusted sources of information (See: Sunday Thoughts: Coronavirus is NOT America's Biggest Problem).  And that situation has deteriorated even further in the three months that have passed since I penned that piece.  Because through this alternate shaming and cheering (and now back to shaming), by any objective measure, the media has finally destroyed what remained of their credibility, and the American people are not so stupid that this egregious and glaring double-standard has been lost on them.

At least, I trust they're not.

Further, we are stuck with a corrupt media that seems intent on creating even more unrest, if it can.  Some might say, "Oh, it's not the media's fault, they're just reporting things as they occur!"  No, they're not.  They report what they want, and they ignore what they want.  Some of this is our fault:  We seem to have an appetite for destruction, so "if it bleeds, it leads," because that gets eyeballs and sells advertising.

Anyway, I have so, so much I want to say about all this, but I'm still holding back.  I don't think people are ready to have the discussions we need to have as a nation, and frankly, I fear we may NEVER be ready to have those discussions.  We have put ourselves in an awful position.

So let's look at some charts.

First up, in the distant past, I've discussed that volatility can act to compress time (a highly volatile market can accomplish in a day what might normally take several weeks).  I mention that because normally I would not consider the alternate count I'm about to present, but because of the extreme volatility of the past few months, it is at least on the table as a potential:

Same deal for SPX:

In conclusion, back on Wednesday, I noted that we had a small impulsive decline down from 3233, though there was some question whether it was wave C of an expanded flat, the break of Tuesday's low kicked that off that table.  The first impulse has since gone on to form an even larger impulse, and that suggests a trend change at the corresponding degree.  Most likely, this is wave (2) down of the larger 5 up, but because of the distance run by the rally from the March low, it's not impossible for that to be all she wrote.  We'll see how it plays from here.  Trade safe.

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