To Be or Not To Be

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Today we will be covering...

• Market Summary

• Cycles and Seasonality

• Chart of the Day

• Chart of the Week

• Technical Analysis

• Cycle Analysis of Major Indexes

• EW Analysis of Major Indexes

• VIX/VXX Update

• Forex

• Bonds

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Market Summary

The indexes rebounded in the last two days from an island reversal gap, trying to close the gap.

There are still dissonant messages from the major indexes in terms of EW counts. Some suggest another high, e.g., NDX, while others, like DJI, suggest the top is behind us. But we are talking about very micro counts; the bigger picture counts suggest we are in the topping area. A similar message from the cycles.

I have been talking about a complex top, a spread topping formation, for the last couple of months, and that’s what we have seen so far. With all the ups and downs, SPX is about 1+% higher than at the beginning of March, while NDX DJI and RUT are now at about the same levels as a month ago.

It was a good time to sell the rips (STRs) or raise cash and for short-term traders to buy the dips (BTDs). It is still a good time to raise cash in such situations, especially considering extreme sentiment and overbought conditions. A monkey wrench is typically positive April seasonality before “Sell in May and Go Away,” which I will discuss below and in the premium section.

Repeat from before:

The short-term analysis is becoming more in line with the intermediate—and long-term analyses, which suggests a reversal is due. The lightning could strike unexpectedly around the tops.

My longer-term expectations do not change. I will repeat from the weekend report: “Despite the market's resiliency and FOMO, I expect a correction in the next 2-4 months, initially.

Repeat from before:

The short-term analysis is becoming more in line with the intermediate—and long-term analyses, which suggests a reversal is due. The lightning could strike unexpectedly around the tops.

My longer-term expectations do not change. I will repeat from the weekend report: “Despite the market's resiliency and FOMO, I expect a correction in the next 2-4 months, initially.

Market data as of close on 3 Apr. 2024.

Cycles and Seasonality

A relentless move up since the October low completely ignored the historic seasonality and cycles that both expected a low of a kind in late March. Expected 40D and 80D cycles troughs since December were just sideways or sideways to up consolidations, which happens when longer and stronger cycles are pushing higher.

Now, we have the traditional “Sell in May and Go Away” seasonality with an April peak. Will it happen this year? We shall see. All intermediate- and longer-term cycles are expected to roll over, except the strong 3.5-year cycle that should be pressing up until late 2025 or early 2026. This cycle may have delayed the peak of 2.1 and 2.7-year cycles, which is referred to as right translation in cycle lingo.

Chart of the Day

The Indian stock market, represented by INDY, is bullish long-term. There is a battle between two counts, black and red. Both need a correction in the short term; the difference is that the red count needs a deeper pullback. I have seen some experts suggest the black count, but my preference is red. By the way, in addition to various cycle methods, we often use EW analysis in our premium content.

I think the pullback has started. After an ending diagonal (ED), INDY made 5 waves down for blue i and 3 waves up, so far, for blue ii. Clearly, below 43.45 the black count is invalidated and we could expect a nice opportunity in the red box, or so.

Chart of the Week

I'm reposting the TLT chart from Premium. Do you remember the bullish wedge patterns I posted 1-2 weeks ago? Here is a real-time example of TLT. The longer-term cycles will provide an up bias, an uptrend in the next 1-2 years. So, a sideways-to-down correction provides an opportunity.

Check out this interesting free investing newsletter, you might like it!

Technical Analysis

SPX  broke below the 2 TLs and trend-defining 10D EMA yesterday but reverted back above them today. An island reversal gap was down, followed by a hammer yesterday, and a gap filled today, followed by a reversal. A mouthful of technical mambo-jumbo and SPX is still flirting with the 2 TLs and 10D EMA.

Further below is what I posted about SPX last night and this morning on X (former Twitter). Please consider my X posts an integral part of the newsletter.

For short updates between newsletters, follow me on X (formerly Twitter):

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