Today, I entered a counter trend short position on US Equities. Countertrend Equity Short. I also discussed the indicator extreme that we have neared in GBP/JPY and how that same indicator level was present at the 1998, 2000, and 2007 tops. GBP/JPY Indicator Nears Extreme.
I currently maintain my primary bullish count for the reasons stated in those posts above. Here is the Weekly SPY count that I was using at the October 15 cycle low:
From a longer term perspective, as was discussed in the prior posts linked above, the bull primary count is that we are in a parabolic rise that started at the October 15 Cycle Low. The alternate is that we are finishing up a Wave 5, which would be very bearish. Here is the chart again:
As it has acted like the primary bullish count, I continue to follow that count. Now, if it were to break down here, then I would likely switch to the orange colored ALT on the chart above. I do not know the future, and neither does anybody else. I just identify scenarios and follow them.
So, here is the rub. I have been mentioning a bearish analog and that I am ignoring that bearish analog. I am going to present it now (you will understand why I have been cautious lately). It appears on the same chart that allowed me to identify that 2011-12 was the end of a complex correction and the beginning of a new impulse. Here is the bearish analog:
When I first identified this cycle, I noted the November 2014 cycle time (low to high cycle) As you can see from above, we have now equaled the cycle time of the 2009-2011 wave up. That cycle time is occurring now with bearish divergence similar to what appeared in October 2007 (the second lower peak on the 2007 blue box). This in no way means it has to play out the same way. Divergences can get corrected. Currently, however, there is divergence.
That divergence is a bit of a concern for the 2400 bulls. I identified the 2400 long term target at the October 15 Cycle Low, but have become a bit concerned that now everybody on the blogosphere is targeting that level. This is especially true now that the P&F targets identified the level a few weeks later. That does not mean that 2400 won't happen, it just feels a bit crowded. The bearish analog does jive with the GBP/JPY monthly indicator level linked at the top of this post.
I have been talking a lot about how I am playing this.The strategy continues to be think bull until it is taken away. In practical terms, I am following the intermediate trend indicator (in the upper right hand corner of this website). I am looking to see if the bulls can stick a cycle low at support at either the November or December cycle low dates (in the upper right hand corner of the screen.
Presently, the intermediate trend indicator is still up so the bull primary is on fine footing. If that does roll over here, then I will begin to think about whether we have a more significant market top here. Staying faithful to what the market charts are presently telling me is all I can do--so that is what I am doing.
There is always a bull path and a bear path. We cannot know which path our future will choose. As always, do your own due diligence, read the Disclaimer, and make your own investment decisions.
Peace, Om,
SoulJester