Another quiet day passed with little change from the last BOOM. Euro has likely peaked, as the dollar has likely bottomed, while Tbonds are within hours/days of a multi month low, but not final low, as that is years away and should coincide with 10 and 30 year yields above 8%. Metals are setting up for significant bottoms too, with slightly lower lows than current levels still possible. 1100 +/-75 remains DSE’s “ideal” ending zone.
The breadth closed negative today, allowing the M.O.’s to continue declining toward the zero line. Vix was higher, after falling the lower BB, and reversing back above that short term extreme. YET, no index shows anything other than “high level corrective” action to date, which forces objective expectations on another slight pop above recent highs.
Then, with historic sentiment extremes in place across the entire spectrum of the herd, and rationalizations for Dow 20k and higher abundant, along with record commitment to the long (and leveraged) trade, the rug is in position to be pulled out from under the FOMC-intoxicated crowd.
Case in point, TWTR is now 20% off last Thursday’s high, after only two days, giving back all progress since 12/19.
Tuesday’s trade will be like watching paint dry, and Wednesday is the next Bradley Turn date (which has influence for a few days on either side of the bullseye), which is often correlated with inflecting the herd’s mood or “animal spirits” (energy). With the 1929 analogy, that points to a January 14th top, if identical to the 1929 overlay, the next couple days to couple weeks is the highest confidence “major” peak possibility since ’07, even though it has more affinity to the peak of ’00.
Needless to say, we are on RED alert for the end of wave b, with wave c slated to decline for three years or less, AT LEAST testing the ’09 low, with better than even odds of breaking them.
Happy Happy New Year to one and all. 2014 should be one for the record books.
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