Sentiment Speaks The market is nearing a potentially significant bottom

Sentiment Speaks: The market is nearing a potentially significant bottom – looking for alpha

Bull vs Bear

Florent Molinier

As we wrapped up 2021, I explained to those who were following my work that I expect a major retreat early in 2022. In fact, I even remarked that “we’re likely to see the biggest pullback since we bottomed in March 2020.”

However, I did not expect the market to drop below the 4000 region at this point. And despite my expectations at the end of 2021, I was still able to outline a fair number of points where I suggested our members raise cash as the market had the potential to go lower than I originally anticipated. The first big point was in late March 2022 when we attacked the 4630SPX region. And I outlined a few more as the market continued to deliver uplegs as we moved lower throughout the year.

A few weeks ago, on September 11th, during my trip, I published an article that outlined the potential for an upcoming 500+ point switch. Interestingly, the two paths I followed both pointed down first. And if that drop was impulsive in nature, I expected the 500-point move to continue lower. In fact, the market even presented us with a low probability opportunity just before the market open as we neared the 4175ES target that we had for the previous rally. And as we now know, the market, to the cent, hit the 4175ES level exactly and started the decline that we have been a part of since that point.

And many of our members were very happy with this analysis:

“Thanks Avia. I took your advice today and bought some protection. Instead of the S&P I used the DAX. The options doubled in minutes.

“Your call for protection was definitely perfect!”

As it stands now, the market is down more than 580 points since hitting the 4175ES resistance target that we outlined to our members of The Market Pinball Wizard, and we have our minimum expectations for the 500+ move met the points we were looking for. However, the microstructure does not indicate that this decline has run its course.

Currently, resistance resides in the 3681SPX region. Initial support will be in the 3550SPX region, with support thereafter in the 3430SPX region. There is a pattern that 3550 support can hold in the coming week. But if we are unable to bounce back above the 3681SPX resistance then we can certainly move further down to the secondary support region in the 3400/3430SPX region.

While I can’t tell you exactly how the market will react over the coming week, I’ve shared the turning points I’m watching to determine where the next big rally might start.

But the most important factor to watch over the coming weeks is whether or not this next rally is impulsive. If the next rally through 3681SPX takes shape as a 5 wave structure, I will stand by my expectation of moving to 5150+ to complete the bull market off the 2009 low after which we will start a 7-20 year bear market.

However, if the next rally is clearly corrective, then I must strongly consider that the bull market capped off the 2009 low earlier and lower than I initially anticipated. That would mean that we may have started at least a 7/8 year bear market, but it could more likely last up to 20 years. I’ve written about my expectations for this potential bear market and how I came to this conclusion in many previous articles, in case you’re interested.

Sentiment Speaks: It’s the Roaring 20s Again – Start preparing for the same ending

In closing, I would like to remind you that we present our perspective by ranking probabilistic market movements based on the structure of market price movement. And when we maintain a certain primary perspective of how the market is going to move next, and the market breaks that pattern, it tells us clearly that we were wrong in our initial assessment. But here’s the most important part of the analysis: We’re also providing you with an alternate perspective, while also telling you our primary expectation, and letting you know when to take that alternate perspective before it happens.

As I’ve said many times before, this is no different than when an army general creates his primary battle plans while also creating a contingency plan in case his initial battle plans don’t work out in his favor. It’s just the general’s way of preparing for battle. We are preparing for the market battle in the same way.

So while I can never tell you with certainty how the market will move over the coming weeks, months, and years, I am presenting enough information for you to know where my primary perspective is wrong so that you can adjust accordingly with them in mind the alternative situation.

I hope by now you can see the difference in our analytical approach, aside from its accuracy. We strive to look at the market as objectively as possible and apply our mathematically sound methodology, no matter how crazy it may sound. In addition, it provides us with objective values ​​for goals and devaluation. So if we’re wrong on the rarest of occasions, we can adjust our course fairly quickly instead of fighting the market.

And to that end, the next market rally will likely tell us whether a major long-term bear market has indeed begun earlier than I expected, or whether we have yet to see another rally to new all-time highs before this major long-term bear market begins. Anyway, I’m still anticipating this long-term bear market one way or another. The only question is whether the next rally points us to higher highs or just points us to a lower high, which would confirm that a long-term bear market has indeed begun earlier than I originally anticipated.

household affairs

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As for upcoming presentations, I’ll be presenting in person at the MoneyShow in Orlando on October 31st and then hosting a panel on November 10th with Elliottwavetrader analysts Lyn Alden Schwarzer, Garrett Patten and Ryan Wilday on our views on the stock market. , Gold, Bonds and Cryptocurrency Markets for 2023.