See my predictions here:
Then, I had to find enough evidence out there to confirm my bias and assure myself that everything I saw in my crystal ball is the future to come:
And today, my predictions of the guru came all true. The market broke up its relationship with bears and up from the pennant and rallied up to the expected target, defined by expected move, and that defined by the pole of the pennant. That target was in the vicinity of 2750 – 2800… but if you look at my picture it was at 2935, but that is a detail which doesn’t fit the narrative so I am ignoring it.
Well, long story short (not really), the market stalled at 50 day MA and now what?
My first gut feeling (the reason why there is no toilet paper in the stores) is that we are going to go through a pullback as of now. Or it can be just a consolidation. We can go sideways, we can do down, or we can continue up. You pick, let me know, and I will win.
People are expecting another crash as this rally was just a bear rally. We recovered about 50% of the previous crash! A perfect Fibonacci retracement. There is no other way but down. Right? Or? What if not? Volume is mediocre, compared to previous days and earnings reports are showing disappointment. All as expected. And that’s the issue I have. It is all expected. This market was crashing all month long on the expectations of Bad Earnings, so this is all baked in already. Or should be. Apple (AAPL) was warning of bad earnings since day one of this coronavirus mess, who would be surprised if what they said was actually true?
Even bearish, now bullish Goldman Sachs agrees with me on this that the bottom is in (https://tinyurl.com/y8re293u). This actually now sparked a lot of controversy among other gurus like me (mainly those who are seers and revelators) arguing that when GS is bearish, you should be bullish and when GS is bullish you should be bearish. And since GS turned bullish you should go bearish. Ignore, that with this narrative it is like 2+2 = fish, because we do not know what time frame, outlook, and metrics GS used for their prediction and we then apply it to confirm or disprove our narrative (that is happening all the time out there). I too argued till death with a person about the market while I was looking at daily chart and the other guy, a day trader, was looking at 4 hr chart. But that didn’t prevent us from killing each other over an argument where the market would go next.
We have to wait for the next move in the market. I have no clue and my crystal ball doesn’t say anything. My market diarrhea gut prediction says we we see a pullback to 2620 level (some very old support from 2018 or 2019 days of glory). That would create a new higher low and moon will be the target again. Or we can really re-test the lows as happened in 1987, 2000, or 2008 (I hope 1987 it is, because that was just 9% loss, while 2000 and 2008 years saw another almost 40% loss). Given my guts, all super bad news about the economy were already expected, people and revelators were all talking about it or weeks, if not months, companies were warning about their earnings miss one after another – sell the rumor, and now we may see the market actually shrugging it all off and going higher – buy the news. And of course, if… and let me stress the IF here… (I forgot the point while stressing the IF).
Another IF: if the bad earnings news will not be as bad as everybody was panicking about during the March rout, the market may in fact go higher from here. So, stay safe, trade so you preserve cash (I buy equities and trade little to do so), and let’s wait what happens next.