And this is a Good Thing. Respect that late surge, oh you bears, relax for a week and let the $VIX come back in. It is very hard to accomplish much good with the $VIX pegged over 70.
Take a breather. W5 down should make 20-baggers great again if it plays out.
My model holds that we are now crossing the great topping megaphone that began with the 2872 SPX high in January, 2018. We are due to reach the bottom at 2100 at the end of March, after which we will bounce in a significant "B" wave relief rally.
Presumably by April the R0 of Corona-chan will have peaked and we will see the light at the end of the tunnel, thankfully, a retreat of the dreaded Chinese-made-and-leaked bio-weapon virus.
|S&P 500 hourly crossing the topping megaphone|
The B-wave relief rally could retrace back up to 4 of A, or it could (more likely IMO) return to back-test the underside of the "bull market" rally channel itself at 2780. Losing this channel caused the historic rout on Thursday.
In April, up until about the New Moon, it will be a death march uphill to attempt to regain the old rally channel. It's all-hands on-deck for this one, the Fed, the banks, internet providers, U.S. corporations, everyone wants to return to the good times of endless asset inflation and credit expansion. All will extend terms, look the other way, lend a hand. Just let us have what we had before, please.
That's when C arrives, the real consequences of the fragile JIT supply-chain networks and dodgy financialized leveraged clown-world we created.
Here's a C wave crash based on the gorgeous candles we had in the fall of 2008. The same geometry gives us bounces at 1040, 740, and a final landing near 520. This is a shape of great beauty and power.
|S&P 500 ABC with 2008 crash overlay|
Does the Fed just run out of dry powder at the June meeting, with nothing left to give? Losing the topping megaphone will be similar to losing the rally channel this week -- a market with no bid. The only bounces then come from obvious technically significant levels and insane bursts of short-covering.
It could all be over by Labor Day. Hoard good books and heirloom seeds.