The stock market bubble appears to have topped in the short run – however, the multi day non-stop rally since the lows is quite strong. Will we hit a new high as we have continuously done for consecutive months, or will it fail at resistance?
Meanwhile, the crypto world see a 70% drop from highs across all major cryptos – is the bottom in or is there more to come?
In terms of wave count – I’m seeing a possible completed 5 wave count – albiet in a somewhat awkward position of the wave – followed by a push over the down trending line on February 14 @ $9,000
We have a 5 wave completed pattern where the 5th wave of that 5 wave pattern was itself subdivided into i-ii-iii-iv-v waves down.
We have a down trend line that was crossed on Valentine’s Day Feb 14.
So it took 8 days for it to consolidate from the bottom for enough days to eek out a push over the down trend line with follow through.
We’ve now hit resistance at $11,200.
Any dips in the $9000 region should experience strong support.
Similar thing happening with ethereum – though ethereum not quite as strong.
Notice bitcoin is well above it’s 4th wave pop on February 3rd @ around $9,300 (currently $10,400)
But ethereum’s February 3rd 4th wave pop was @ $1,000 (currently $943) — so ethereum has surprisingly been weaker than Bitcoin on this bounce.
I’m a semi-believer in this notion of “flippening” – in which ethereum is supposedly going to surpass bitcoin — yet the price action just isn’t reflecting that.
On the other hand, it is noteworthy to say that Bitcoin dipped close to 70% from the all-time highs of almost $20k to $6,000.
Whereas Ethereum dropped from around $1,430 to $550 – close to 62% drop from the highs.
Both are pretty bad drops with ethereum only slightly better. But for whatever reason, bitcoin’s bounce has so far been stronger.
The S&P500 was making no sense from September up until the peak – shortly after Trump’s State of the Union Address when he was bragging to the nation about the stock market being at all time highs.
Starting in February – the market wipped out many days of gains in just 2 days – but has since rebounded in what might be a fake B-wave rally that should hit resistance near 2800 ES.
If we do get a c-wave, it could target 2410 ES ragion. If not, then this could hit new all-time highs yet again.
I have a preference for the C-wave down, but I still think it should be several trading sessions away – maybe towards end of the week and it shouldn’t be over so quick. Certainly this A-wave drop was very swift. In the past when this happened, the B-wave also stalled out and took a long time, so I can’t imagine the C-wave being fast as well – especially as everyone seems to be expecting it.
So for now, bias is to the upside for the immediate upcoming 24-48 hour window – with resistance near 2800. If we can compete 5 waves – then a potential C-wave down looms into end of February.
If this C-wave is indeed swift – then we could happen is we get a rally in March – followed by yet another drop in April-May to complete a complex double zig zag pattern.
Nasdaq showing similar signs of a possible B-wave rally.
Same with the Dow. This market is way over extended with almost no volatility for way too long. We are finally getting some volatility and movement – which should hopefully make reading these waves easier.
If you’re holding long term stock – I believe exiting now and reentering in a few months should be possible – unless this bull market just keeps screaming higher as it has in the past 6 months.