By Poly

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We’re starting to see some very interesting price movements within the equity markets. Primarily, the recent decline has been much sharper and deeper than I would have expected for a Daily Cycle that is so young. This is a bearish sign, although on the surface, we do not have anything close to a Cycle failure, so of course maximum respect must continue to be bestowed on this great bull market. It wouldn’t be the first time that the bears became excited with a sharp single digit (%) decline, only to be savagely mauled by the bulls. “Buy the dip” and “Rinse and repeat” they “smuggishly” have called, as they repeatedly push the market to new all-time highs.

But underneath this market, I sense tension and concern, which I suspect could quickly turn to outright fear. This market is speculative in nature, it’s not a true secular bull market and the participants are acutely aware. For that reason, the smart money knows that while the “party continues”, they will continue to play along. But they also know that with each passing week, and new all-time highs achieved, the market is on increasingly borrowed time.

So the equity markets are going to be put to a test in the coming weeks. As this is just Day 15 of this Daily Cycle, we likely just witnessed a severe Half Cycle Low decline. A rally will come now as the 2nd half gets underway, this should be expected. And if past Cycles are to be trusted, then in theory because this is only the 2nd Daily Cycle, this should become Right Translated, resulting in yet another new all-time high.

But there are bearish signs developing (Bonds, Oil) and the market is on edge. The recent volatile and rapid swings in price could be foretelling of a top in the making. Therefore, a failure to make new highs, which then then breaks below the 1,992.44 and 1,972.56 levels will be a Left Translated Cycle, signaling a major market top. The market has not needed to prove itself for some time, but this is a case where I believe the bulls need to defend this area and push for all-time highs. A failure to make new highs signals a top to this Investor Cycle. I’m not going out on a limb here…but I wouldn’t be at all surprised to see this coming rally sold and the start of a protracted decline begin.

1-7 Equities Daily


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