Yesterday we got the news that the fed has finally reached its 2% inflation goal!
This is after 9 years of interest rates pinned on the floor, and about 4.5 trillion in cheap credit flooded into government and wall st.
That is all it takes!
Now the central bank can rest easy as the target has been met and all is well with the world. Right?
Let me summarize where we stand in this current bubble.
1- 40% of the stocks traded on the NTSE are below their 200 day MA.
2- market uniformity has been broken, new 52 week lows outnumbered new 52 week highs,
3- credit spreads are worsening as junk bond yields have soared over the last week.
4- a possible series of 1,2 waves off the recent high at 23600.
5- extremes in bullishness displayed by market actors across the board, from governments to corporations to individuals,
45.1% bullish, 23.1% bearish in the latest AAII investor survey.
6- Bearish momentum signals registered today on the 4hr chart, and the price is approaching the 200MA.
These facts alone do mean that the final high in stocks is in, but every major market top in history, is characterized by conditions exactly like I just described.
As I have maintained for the last few months, now is not the time to be foolishly bullish, be vigilant, start saving.
Because this market is ready to rip the rug out from under us.
DOW JONES INDUSTRIALS
30 min
4 Hours
Daily
My Bias: market topping process ongoing
Wave Structure: Impulsive 5 wave structure, possibly topping in an all time high.
Long term wave count: Possibly topping in wave (5)
The DOW gaped higher right out of the gate this morning. Investors are not willing to submit to reality just yet!
I have labelled the rally of the recent wave (i) low as a possible expanded flat correction wave (ii). The price is now sitting at the 61.8% retracement level of the previous decline.
On the 4hr chart, you can see that the price has rebounded off the 200MA, a further decline below the MA will add significant weight to the fully bearish wave count.
