According to my risk summation system, the days this coming week with the highest risk of a turn in or acceleration of the current trend in the DJIA are Monday the 24th, Wednesday the 26th and Friday the 28th. The Monday risk window may actually be part of a bigger window which started this past Friday the 21st, and the Friday of next week risk window may also be part of a bigger risk window which includes Monday the 31st. Sorry for the complexity, but this market may be about to get even more violent, with the risk of gridlock unlike anything anyone has ever experienced outside of a commodity pit.
This past week my system showed risk windows on three out of the four trading days. I should have just labelled the whole week as a risk given the sharp sawtooth decline that occurred.
Mia culpa for pointing out in a recent post a bitcoin pattern that failed. The cluster of long tails formation that I noted in the daily chart only led to a brief rally which failed. Bitcoin has broken below the level of the pattern. Leave it me to point out a pattern that has been behaving nicely right before it goes off the rails.
On a brighter note, the Pound has been generally marching northward since my post touting its prospects. Unfortunately for old blighty, a lot of the shine has now come off Cable and it might be in for a rough patch depending on Boris's ability to tread water wearing cement galoshes.
My dark comment above concerning market gridlock stems from my current Elliott Wave count shown below and the current investment concentration in a few high flying stocks. If I am correct to a tee, the odds of which are about as good as a lame horse's at Pimlico, we may be stumbling toward a third wave down in a bear market where every mother's son is heavily invested in just a handful of stocks. This has the makings of a fat ladies' mad rush for the doors at opening time for a Walmart black Friday sale scenario. Sorry for the visual, but it might just be apropos if I'm right about the cliff ahead. The fly in the ointment of this outlook is Jerome's put, where exactly is it and when will he unleash a new flood of funny money if the market breaks hard? I know it's there somewhere basically because it has been ever since Frankenstein Greenspan created this monster. The central bank has ceased being a defender of the currency and defeater of inflation and is now just a slave to the DJIA, but if, and that's a big if, a third wave down gets underway before the FED can turn on the pumps, a lot of damage can happen in a very short time.
My count above is probably complete crap if the blue trend line is broken before the green one. The FED reaction to any sharp break may create a neck breaking snap back, but a lot of stops may be hit before it gets traction. Anyway, my ability to correctly predict these sort of non-linear events is somewhere beyond abysmal, but risk is what it is, a fragile "maybe" floating in a sea full of big iceberg "if's". Given the damage done last week, it wouldn't shock me if they crank up the money pumps bright and early this coming Monday, but sooner or later gravity is going to win out since this ever expanding rubber skinned stock market bubble is starting to look a lot like a lead zeppelin.
Regards,
Douglas
Edited by Douglas, 22 January 2022 - 02:13 PM.
