Market Timing and Price Projections: December 24, 2023

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Table of Contents

• Introduction

  • Technical Analysis

  • Sentiment

  • Cycles

  • Elliot Waves Status of Major Indexes

  • Conclusion

• Cycle “X-Rays” of Major Indexes

• Major Indexes Cycle Price Projections and EW Coun …

• VIX Update

• Annexes- NVDA

Introduction

• Is Santa already in town?

  • Yes, it came earlier this year.

• You must be wondering if it will stick around until January.

  • It is very possible, although the market is running on fumes.

• Where is Bitcoin going? It could still push higher for several days but not much longer IMO. Watch my analysis with specific details in the YouTube video:

Technical Analysis

• Are you tired of daily and weekly charts TA?

  • I am. The picture is negative. But let’s still review some indicators as “repeticio est mater studiorum”;

• The below figure shows a relatively low volume SPX rally with negative divergences of the Money Flow Index (MFI), RSI, and True Strength Index(TSI) → yellow/red flags, expect a correction;

  • Recall that the SPX/VIX ratio hit a historic high (>20Y) just a few days ago, which also warns of anon-negligible correction;

Sentiment

• We have beaten to death the intermediate-term sentiment indexes recently – they indicate complacency, greed  yellow flag;

• Where do you think the US stock market stands with long-term sentiment indicators?

  • Recall that Husman’s indicator did not paint a good picture for the next decade, let’s look at another long-term “sentiment” related chart.

• The chart below shows that the household equity exposure in the US stock market, as % of total liquid assets, now exceeds the extreme levels of the late 60s and 90s.

  • How did the US stock market perform after that?

Are you bearish enough?

• If yes, “Hold your horses (shorts).” Technical indicators and sentiment are not sufficient by themselves, we also want to look at cycles and EW analysis. Need all four to send uniform messages.

Cycles

• There is still some bullish fuel in a couple of cycles, perhaps for another week of grinding higher, e.g. the nominal 20W (N20W) and N10D cycles could still provide some upward bias for another 3-4 trading days or so (the 2.2Y cycle is also peaking but it has wider tolerances);

• Major indexes reached the N20W cycle projections but they could still move higher within the target ranges, or toward shorter cycle targets.

Elliot Waves Status of Major Indexes

• Elliott Wave (EW) counts of most major indexes ideally require another higher high;

• But sometimes things are not ideal at significant tops and bottoms, e.g. another sudden rug pull reversal may cause a truncation of the last wave in the EW structure.

Conclusion

Based on the considerations above, and analysis in our premium content section of the newsletter, one could expect some further minor upside next week in most major indexes but expect a correction into late February or early March 2024. There is also a potential for a bigger correction into the Fall of 2024, but it is premature to talk about that now. One step at a time.

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