Top this Week- To Be or Not to Be

Table of Contents

• Summary

• Technical Analysis

• Sentiment

• Bitcoin Update

• Cycle Analysis

• Major Indexes EW Analysis

• Annex 1 – Bitcoin Analysis

• Annex 2 – TLT (20Y Bond EFT) Analysis- Cycles

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Summary

• So far, things were progressing as expected;

• Cycles suggest potential top and reversal this week – of course, always need to provide some tolerance to cycle predictions – also need to keep in mind the beginning of February positive seasonality;

• The wave patterns of main indexes do not look complete, and still slightly higher is possible and to be expected, but caution is required as this week a top is expected;

• Also, cycle price projection targets still could accommodate somewhat higher in major indexes.

Technical Analysis

• Several days ago, I mentioned that after the pullback, ST traders may get one more long scalp opportunity, investors an opportunity to raise cash;

• Indexes did not waste any time and, in 2 days, rebounded from oversold to overbought, as can be seen from the hourly chart in Figure 1;

• SPX is well above the upper Keltner channel boundary; it needs to pull back in, but the wave structure on the upside does not look complete – maybe some pullback and another push higher, to micro, to be certain.

• On the daily chart, SPX also pushed above the Keltner channel; it could stay there for a few days but eventually need to return to the channel;

• RSI and Stochastic have started developing negative divergences, warning about topping soon.

Sentiment

• Investors have started to “pull in their horns” since late December from extremely bullish levels;

• Based on things I am looking at, the bullishness will not go to a higher high any time soon;

• Rather, it should be a prolonged decline to the bearish levels below 20%.

Bitcoin Update

• Bitcoin has the nominal 20-week (N20W) cycle target to the 38k+ to 40k- area, the red box in Figure 4.

• The drop looks impulsive, so far, and Bitcoin can complete the full 5 waves down in the red box to signal the start of a downtrend;

• Subsequently, Bitcoin can bounce, ideally not higher than the 43-44k area;

• If it bounces above the gray FLD band, it could generate a target above the January high, so the 46k level should be watched closely.

• Time cycle analysis is presented in Annex 1.

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