This ratio is so key …
We banged into two converging trend lines – resistance – that caused the ‘ratio’ to go down which led to ‘equities’ finding some support. Pretty ugly rally, if you ask me BUT we now know why we found the support.
If/when (certainly does seem like it) the upper trend line gets taken out to the upside, then the selling will more than likely continue (intensify?) up to the blue zone.
There we have 4 nice attributes to build a wall of resistance … I suspect that will hold. Not sure if this is IT and we go to new highs or it’s a bounce…. I think we’ll know if/when it occurs.
When we end up bouncing/find the low, I’ll take a peak at my trusty dusty (it is) 14 period RSI and see if we have broken any ‘bear’ or ‘bull’ zones … on long term charts, the market will tell you. Ms. Brown taught us that in her book and it’s a part of CMT II.
I’ll be looking on the hourly to see if/when support comes in for the ratio … expect this to be corrective and, therefore, swings will be crazy.
Honestly, just set your stops and take the rest of the week off …
The reason I hesitate to say BUY for new highs or BUY but it’s just a bounce is because I really have no clue …there are arguments (too many of them if you ask me) from both the bulls and bears. All I know is some LONG TERM targets were hit and, therefore, it should surprise us to see a 30-40 percent correction because that is what they done on most major CORRECTIONS.
Now, that being said, I want to post this chart of the IWM as this is the count I have been going w/ for a few years. (Still doesn’t mean its right, LOL!)
And away it went … one of the ‘best’ things I learned when starting to count (I’m still a work in progress w/ it) is look for form, balance and harmony. See how Wave 2 and Wave 4 just look right …?
So, if this count is correct (it’s guided me nicely for a while) then the Russell is cooked – night night – call it a qual. And to that, I say, WOW. Hope (a strategy) I’m wrong because -is it too crazy to be guilty by association – what does that say about the rest of the market? Is this a BIG BIG TOP?
