Stock Market Bounce in Progress

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MicroStrategy Street Buzz

• Notable developments have occurred at MicroStrategy. Former Binance.US CEO Brian Brooks has joined its board, while Adam Back believes the company is undervalued, describing it as "stupidly cheap." 

• Additionally, Scaramucci defended MicroStrategy's bitcoin strategy, predicting long-term growth in crypto markets. Meanwhile, the company's stock price declined over 14%, partly due to concerns about potential inclusion in the S&P 500 index. 

• Despite this volatility, MicroStrategy continues to make significant bitcoin purchases, exceeding those made during the 2021 bull market.

• MicroStrategy continues its bitcoin buying spree for the 7th straight week as the crypto dips below $100,000

  • MicroStrategy has bought 5,262 bitcoin using proceeds from a sale of $561 million worth of stock.

  • The company now holds 444,262 bitcoin, worth $27.7 billion, bought at an average price of $62,257.

  • MicroStrategy's bitcoin buying strategy involves leverage, posing a big risk if the crypto declines significantly.

BraVoCycles Comment:

• While Adam Back thinks that MSTR is undervalued in view of its Bitcoin holdings, MicroStrategy thinks the opposite (sells its stock to buy Bitcoin) – Who do you trust more?

MicroStrategy Stock Analysis

• What can we notice from the MSTR technical chart from the technical analysis point of view?

• First, notice a parabolic in crease in volume but not as significant price increase compared to the price history.

• Second, there is a double negative RSI divergence: 1) Between peaks of waves III and (3), and 2) between (3) and 3. 

• If course this does not prevent another high with yet another divergence. However, it does indicate a loss of long-term momentum in MSTR price movement progress.

• Does Elliott Wave Theory provide additional insights? The answer is affirmative yes.

• Notice that MSTR is completing five waves from Oct’23 and, at a higher degree from 2009.

• It is possible that it already topped in pink (5).

• Alternatively, it is possible to have one more swing higher in wave 5 of (5) of …

• As we learned from EWT lessons, after five waves up, at least a three-wave correction will come.  

• This correction can retrace a significant fraction of the advance from the 2009 low. The whole advance from 2009 appears to be an ending diagonal.

• Is it black or red count? That is not possible to answer without significantly more structure. However, in either case MSTR should head significantly lower.

• In the most optimistic bullish scenario, it should at least reach the 23.6% Fibonacci level at about 100.

• A plausible target is about 15, which is a confluence of the 50% retrace Fibonacci level, circle-4, downtrend line of the ending diagonal, and support of congestion area between 2005 and 2024.

• A bigger downside potential exists, e.g. 61.8% Fibonacci level, i.e. 

• to the single digits. Yes, I know, sounds unbelievable, but it is a possibility.

2007 Bear Market Analogy

• In the last newsletter, we showed the 1978-81 SPX pattern that resembles the present SPX pattern. We also showed that present cycle composite estimate rhymes remarkably well with the shifted 1978-81 pattern.

• Below is another analogy, this time with the 2007 bear market.

• Do these analogies make any sense?

• Yes, the stock market has a fractal nature including the fractal nature of Elliott Waves. The fractal nature presumably stems from human socio-behavioral patterns.

To continue reading about Market Summary, US Markets, Elliott Wave and Technical analysis of US Markets, volatility, as well as commodities, bonds, forex, currencies or crypto, upgrade to Premium Pro. . .

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