BTD to get stuffed
Tuesday, December 21, 2021
Published irregularly, as conditions dictate.
Last week mention was made of the 13-15 day cycle, with the midpoint of that, due to bottom on today December 21. Looks like it hit on the 13-day mark:
This morning looks like a an upward rip with many looking for this to be the initial run to new all-time-high’s yet again. This may well be a fake-out move that stuffs the buy-the-dip crowd.
The cyclical content of the market has vanished with the half-cycle differencing technique we use (which determines cycles in very recent data.
The breadth measures have been and remain sick, with the advance/decline line, cumulative up volume / down volume and on-balance volume all having topped out long ago. These can change - often, bull markets set up divergences then steamroll right through them, sending the breadth measures to new all-time-highs along with prices. But this is pretty pervasive, across-the-board, and backed up by darling stocks of recent years getting smashed here. Leadership is truly gone.
Most importantly, the impulse of volume has been to the downside where the market was not oversold in 2 of the prior 4 weeks:
Trading volumes are thin this week - big moves can happen, particularly to the downside, of which things are very vulnerable to a big, quick surprise selloff here.
The daily chart has not given us a buy signal based on being oversold with high volume yesterday - this sets the table for a fake-out buy today.
Remember, we’re in historically over-valued territory. during a very thin week, with technicals setting up to trap the buy-the-dip crowd. A goodtime to be out altogether if you cannot be short.
The parallels going onto previous bubble tops is astonishing, both in the market as well as culturally (e.g. the preponderance of musicals released this year, indicative of market tops). If you can obtain it, look for anything you can find on Socioeconomics by Prechter (personally, I am not a fan of his work, but his material on Socioeconomics is superb). Everywhere you look, culturally, are signs of a major market top. Everywhere you look, technically, are signs of a major market top. I will have more on this over the next week or so - on just how historically overblown this is, and a peek at gold and why this is not the time to be buying gold from a novel technical standpoint.