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Waiting for Godot – Market Correction
BraVoCycles Newsletter
February 25, 2024
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Nov-Dec Bears Waiting for a Market Crash
Market Summary
I showed last week the 2nd half of February negative seasonality. It seemingly worked except for a strong up day on Thursday and possibly up on Monday. QQQs seasonality is negative from mid-February to mid-March. We also need to keep in mind the positive seasonality in the first couple of days in March.
Except for slightly higher in some indexes early in the week, I could not find justification for a continued push higher by major indexes. Cycles, EW counts, technical, and sentiment all send the same message. It is time to correct.
I expect a correction in the next couple of months. In such situations, raising cash on the rips is not a bad idea.
I am mindful of everyone’s time availability, but important times in the market require another massive edition.
Market data as of 5 pm EST on Friday
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Some of you may have noticed that in my analysis I use four methods as listed below in the order of importance for my opinions, about the market in general and individual financial instruments in particular. The first two, cycles and Elliott Wave analysis I typically cover in the premium content, while the last two I typically cover in the free content.
Cycle Analysis, turning points and price projections;
Elliott Wave Analysis;
Technical Analysis, and
Sentiment.
Time Cycles are the corner stone of my approach, the key for identifying opportunities and turning points. Cycle price projections, Elliot Wave and Technical Analysis are used, when revealing, to try to accurately identify good entry and exit points. Sentiment extremes are yet another way of identifying a broader time range of possible reversals.
Technical Analysis – Candlesticks
Something different today - Japanese candlesticks anyone?
Are we going to get a bearish Evening Star candlestick pattern in SPX? Maybe, maybe not. To get the bearish Evening Star we need a red reversal candle into the range of Thursday’s bullish candle. Else, it may be just a pause/consolidation in SPX before another pop higher.
DJI ($INDU) made a bearish Gravestone Doji candlestick on Friday.
The market breadth is significantly lagging SPX. The NYSE Advance-Decline Line shown below is below late 2021 high while SPX is at a new high. It just poked over the trend channel and is hitting a technical resistance. Good reasons for it to roll over. But if small caps make another push higher, and they have been lagging recently, the NYSE Advance-Decline Line will get a chance to catch up with SPX.
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Going to Europe - Germany ETF (EWG)
The “sick man” of Europe, Germany stock market is showing remarkable strength, despite problematic economy.
However, I consider its rise from Oct’22 as a corrective A-B-C. Moreover, it appears that its dominant cycle should be turning down into the late 2024 or early 2025.
One of our premium members noted on X (former Twitter) that DAX has the highest inverse correlation with Natural Gas, and we were posting in the premium about Natural Gas (NG) bottoming this winter/spring.
BTW, follow me on X (former Twitter), I often post interesting and/or timely charts there in between newsletter sends.
Sentiment
Some additional sentiment perspectives. Remember, sentiment indicators describe the sate of the market. They are not precise timing indicators.
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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