BITCOIN AND STOCK PRICES, BOTH SYMPTOMS OF SPECULATIVE EXTREMES!

I had another look at bitcoin today!
The low of the day is hit 11121 so far,
So the price has collapsed 43% since the 17th of December.
Thats a hell of a decline for the so called ‘asset’ that was on its way to the moon!


And all those folks who bought into the sure thing of the century,
The new shiny object in the shop window,
are now licking their wounds,
and wondering how they could ever do such a stupid thing as buy at the top.
Why did nobody see this collapse coming??

Mmm,
Am I speaking about the stock market or bitcoin here!
I have said it before and I will say it again,
Bitcoin is a harbinger for the economy and the financial markets as a whole.
It’s monumental rally over the last year,
was a indication of the extreme appetite for speculation in the general public.
And now, the monumental crash that it is undergoing,
is a signal of the shift in the mood of that very same public,
away from speculation and towards a more frugal outlook.

Bitcoin is at the fringe of all things speculative,
And so it is collapsing first.
The dominoes will fall inwards towards the center of the financial world.
Just as they did in 2007.
And that center consists of the sovereign bond markets and the prominent stock indices.

 

The next domino to fall will be high yield credit,
Which has been sitting at or near all time lows lately.

As for the stock market:
Last week saw another extreme in bullishness within the professional finance world.
-64.4% of investment advisors were bullish
and just 13.5% bearish.
This is the largest divergence in over 30 years!

Maybe stocks will be the next domino to fall after all!

UPCOMING RISK EVENTS:


USD: Capacity Utilization Rate, Industrial Production m/m,
EUR: Final CPI y/y,
GBP: N/A.
JPY: N/A.

DOW JONES INDUSTRIALS

30 min

4 Hours

Daily

My Bias: market topping process completing
Wave Structure: Impulsive 5 wave structure, topping in an all time high.
Long term wave count: topping in wave (5)

The DOW has seen its first impulsive looking decline today
after reaching another all time high at 26082.
The price declined 300 points into the low of the session at 25708 a few moments ago.
If the bear market is going to start here,
this counts as a good start for sure.

From here the key price action I am looking for is a clear five waves down off the high,
Followed by a clear three wave recovery to a lower high.
This must be visible on the hourly chart.

Certainly the extreme reading in investor bullishness fits well with todays sudden decline.
Either way, this was overdue.

For tomorrow;
Lets concentrate on building a larger impulse wave to the downside from here,
At that point we can get excited about the possibilities!

U.S CRUDE OIL

30 min

4 Hours

Daily

My Bias: topping in a large correction wave [4].
Wave Structure: Double combination higher in wave [4] red.
Long term wave count: wave [4] target $63 – $70

Crude corrected off the high as expected today,
the decline has not cleared up which of the current wave counts is actually correct.
Its a bit of a puzzle, but I will lay out the options.

The current operating count views the correction as either a running flat,
or an expanding flat.
The expanding flat idea requires a break of support at 63.06 to be valid.

Also,
The alternate count shows a now complete impulse wave at todays low.
Waves (i) and (ii) grey are complete and wave (iii) should follow into the $66 handle.

For tomorrow;
A further rally off todays low at 63.39 will favor the alternate wave count.
A further higher low above that level will also point to the more bullish alternate count.

Won't your trader friends like this?
Bullwaves
About the Author
Rather than seeing just the price candle that is forming now and frantically fumbling around in the dark for opportunities to enter the market that just never seem to materialize. I invest my time into finding the best trade entry point with the smallest risk reward ratio using the price patterns Elliott wave theory describes. So when the opportunity does arrive I am ready to take it. And that is a skill that I want to impart to people. I have found the wave principle an invaluable tool in my trading, the wave principle helps me see order in the chaos. And on many occasions the wave principle has helped me make absolutely stunning forecasts for the future path of asset prices. Which I have documented in my daily analysis on Bullwaves.org. This is not because I have a crystal ball, but rather, the wave model showed me what was likely to happen, given the price patterns on display.

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