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Consolidation Day
BraVoCycles Newsletter
March 04, 2024
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Market Summary
After expected strength into early March, which we got, major US indexes were consolidating Thursday-Friday gains in sideways-to-down 3-wave corrective moves. This suggests that at least one more push higher is to be expected. Indexes largely satisfied the 3D cycle targets down, while RTY still has the 5D cycle target slightly lower. This also suggests a bounce short-term. So we should follow the hints the market is providing both short- and long-term.
The longer-term expectations do not change. I will repeat from yesterday: “Despite the market's resiliency and FOMO, I expect a correction in the next 2-4 months, initially. Raising cash on the rips is not bad when the market is overbought.”
Market data as of 4 pm EST on 4 Mar. 2024.
Technical Analysis
Below is one of my recent posts on X (formerly Twitter). A significant technical chart from a longer-term perspective. NDX has just poked above the trend line (TL), connecting the two significant peaks in the last 25 years, in 2000 and 2021. I suppose bulls may say it is a break out, sky is the limit. I suspect it is fake through over, and NDX might revert below the TL very soon.
Not also very pronounced negative RSI divergence on this weekly chart.
Last but not least, notice the declining volume during the rally from November.
These are not positive signs for NDX.
For my updates between newsletters, follow me on X (formerly Twitter):
If you are a trader, try to familiarize yourself with pivots.
An example of Inverse Head & Sholders (H&S) pattern. BABA had a rough patch but has formed a nice inverse H&S. Above the resistance at about 77.7, the inverse H&S in BABA will target the about 88 resistance band.
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Liquidity
Credit leads equity.
The tech sector is most correlated to liquidity. If the liquidity turns south?
The Bank Term Funding Program (BTFP) is set to expire on 11 March, 2024. Are they going to extend it? If not …
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Sentiment
Another sentiment indicator. A combination of: 1) AAII Bull Bera Spread; 2) II Bull Bera Spread; 3) NAAIM; 4) CBOE Volatility Index; 5) Equity Put Call Ratio 5-day, and 6) Equity Put Call Ratio 10-day.
Bitcoin
Trading update.
On many time scales Bitcoin significantly exceeded the cycle projection price targets. Amazing/unusual. The highest projection I have from the intra-day cycles is the green box. Of course, it is always possible to pull back and make another loop higher with a new target.
Notably, as of this writing, Bitcoin has almost reached the triangle projection. According to the EW Theory, trusts from the triangles are terminal moves, at least for the corresponding wave degree. In plain English, at least some pullback should commence after a pop from a triangle.
eBook: 3-Year US Stock Market Outlook
The stock market will exhibit significant volatility this year, IMO. To prepare for market swings down and up in the next couple of years, read our eBook about the stock market outlook for 2024-2026. To get it for FREE, share the link below with your friends, family and on social media and if 2 friends subscribe to BraVoCycles Newsletter using your link, as confirmed by Beehiiv, you get our 3-Year US Stock Market Outlook eBook FREE! We’re excited to share more of our content with your friends and family and the cutting edge technical analysis in our eBook with you.
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