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“It Will Never End. I Quit!”
… is the sentiment you want to hear from all around you. Friends, neighbors, family, colleagues, customers, suppliers, the kid at the bus stop. You want to hear everyone saying, MAN this market is insane, here’s what I heard, I heard the Fed is going to SHUT DOWN THE WHOLE US MARKET it got so bad.
We probably aren’t quite at that level of doom but then, we haven’t asked the kid at the bus stop today, so, could be different to how it seems to us here at Cestrian Towers.
We long ago learned yogic-Jedi techniques to ignore feelings when it comes to stocks. Feelings are for other people to have and for us to chart and then, hopefully, to make bank off of the back of.
To finish off yet another miserable day in the neighborhood (and it was looking so promising premarket!) allow us to walk you through where we think we stand in the major index ETFs.
We’ll do SPY first for all to read for free, then turn to the QQQ, the DIA, and the IWM for paying subscribers. If you want to join us, we keep the prices here as low as we possibly can. It’s just $9/mo or $79/yr to become a paying member. Based on how few people leave us after they join, we’re confident you’ll think it’s worth the money. You can sign up at the link right after we walk you through SPY.
Righto, here goes.
$SPY
SPY to our eyes remains in a multi-year bull market rising up off of the 2020 lows. At the moment we’re in the longest duration pullback since the Q4 2018 reset. Using our wave & Fibonacci lens we can say the current level is well within a Wave 4 down which gives us confidence that a Wave 5 up will be starting soon. (If we had feelings about the matter and listened to them, we might worry. But the combination of the chart logic - a very clean wave pattern for the last two years - and the extreme negative sentiment - tells us a reversal upwards can soon happen).
You can open a full page version of this chart, here.
We’ve had this chart etched out for some months now and nothing has changed. So far SPY has held in the region of the 0.236 retracement of the Wave 3 up and it is still holding at today’s close. Despite the pain being felt by investors in high beta (remember high beta means over-reacts vs the market - on the way up good, on the way down bad!) right now, the correction in SPY is normal and not particularly brutal. We anticipate SPY moving up to make new highs and beyond within the year.
Now let’s take a look at QQQ, IWM and DIA.