Monday, June 19, 2017

What we are missing for tomorrow

We have a Bradley turn tomorrow, the market is overextended up into the daily top Bollingers, but we are still missing one very important element for a durable top -- no breadth divergence!

Deflation Landers ready to rumble

This is an important element in all the big tops, market breadth evaporating into a final high.  But we can see new highs with the recent market run up.  Chart from Tom McClellan.



So while we may get a tradable selloff into the end of June, we should propose a short-term count more along these lines, as we levitate into July.  A divergence with NYAD, etc, by then would be a very welcome sight.

SPX ascending megaphone top

9 comments:

Christian Gustafson said...

Deflation Land salutes 1992-era based Los Angeles Koreans.

Hugh Jazole said...

I was wondering what you thought about breadth. The BPSPX is getting very close to bull territory again. Any major downturn has been put off till at least 2018 imho. If we are in a late 90's scenario it could be a few years. There are still too many people on the sidelines, we need to people jumping on board who have NEVER bought stocks. These sky high valuations want to come back down to earth, but the balloon needs a pin to prick it! As the balloon inflates further, it won't take much to pop it.

Bryan Franco said...

So strange that oil is STILL falling. World GDP must be collapsing.

Hugh Jazole said...

Higher average MPG might also be putting pressure on oil prices. I don't buy into the "low oil prices are bad" narrative at all.

https://www.washingtonpost.com/news/wonk/wp/2013/12/13/cars-in-the-u-s-are-more-fuel-efficient-than-ever-heres-how-it-happened/?utm_term=.c5b1c972a7b9


Hugh Jazole said...

Humans are circling the drain.

https://ca.news.yahoo.com/cultural-appropriation-illegal-worldwide-indigenous-141353873.html

Hugh Jazole said...

Humans are circling the drain part 2.

https://moneyish.com/ish/5-facts-that-prove-americans-dont-know-anything-about-managing-money/


Christian Gustafson said...

Today looked like a turn, the start of the correction of the leg up from 2352 on the S&P. If we draw the channel on the chart, the lower bound is right at 2400 on 6/30.

A 5th wave up comparable to the 1st would then run for 2 weeks, topping out at the 2470 level. We still need the "Breadth Divergence" achievement unlocked, and maybe a few others, to get a really fine short entry.

Kevin Wilde said...

XLF looks like wave 3 crash has begun, after completing classic 5 wave impulse down, and now 3 step A-B-C up. That could deliver negative divergence, as financials are a huge part of market. Add in weak energy and trannies, and there you go. Watch the financials...

Hugh Jazole said...

You've got some slimy new friends up there.

http://q13fox.com/2017/06/20/sea-creatures-usually-found-in-tropical-waters-show-up-off-washington-coast/