Friday, February 26, 2021

SPX, Gold, TRAN, INDU: Is the Party Over?

 "I'm all dressed up with nowhere to go,
Walkin' with a dead man over my shoulder...
Waiting for an invitation to arrive,
Goin' to a party where no one's still alive...
It's a dead man's party, who could ask for more?
Everybody's coming, leave your [economy] at the door..."

-- Dead Man's Party, Danny Elfman/Oingo Boingo

We've been anticipating this as a potential "final fifth wave rally" for a while, but some interesting things have happened since last update.  In the prior update, I noted that SPX could still make a higher high, and while it didn't, many other markets did -- including INDU, TRAN, NYA, among others.  Let's start off with INDU's long-term chart, where many past projections have played out very well across time.  The past few times we've discussed this chart, I felt that INDU probably needed to head at least a little bit higher.  It has now done that:

TRAN is another market that made a new high yesterday, and its long-term chart is interesting:

NYA made a new high -- and here's where we might note that from a long-term perspective, there's still work for bears to do before they begin to get anything approaching "confirmation" -- so we are front-running with any speculations that the bull market is over (or nearly over).  A fifth wave extension is still possible:

SPX is one of the markets that failed to make a new high -- and it stalled just shy of the first key overlap, which made for as low-risk an exit/entry point as it gets.

Finally, I want to briefly touch on gold, because this chart looks like potential trouble for gold bulls at the moment.  Gold bulls could reset this look (at least a little; it wouldn't put them entirely out of the woods) with trade over the noted level:

So... what does all this mean?  Are we there yet?  Is this the end of the road for the bulls?  On the one hand, there are enough waves up for that to be the case.  On the other hand, we have nothing approaching "confirmation" from the market yet (but, of course, the nature of the game is to try to be a bit ahead of it), so it's a bit early to say with much conviction.  

Thus, in conclusion:  As I've noted a few times in recent past updates, we were approaching the zone where five waves could complete -- and yesterday, INDU, NYA, et al, rallied enough to complete those patterns.  At least potentially -- since it's very early, we still can't rule out a continued fifth wave extension; but bulls now need to prove that is their intention by rallying back over the all-time high.  If they can't, then the market could be in real trouble.  Trade safe.

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