“Don’t fight the Fed.” — Martin Zweig, now deceased, and long term technical analyst, known mostly as a regular panel member on Wall Street Week with Louis Rukeyser.
Zweig’s axiom has never been more apparent than the market behavior since the low on Oct.11, 2011, at 1074.77 S&P500 Index;however,since the advent of financial globalization that truism should now be expanded to say: “Don’t fight the world’s central bankers.”
I have been contributing to Mr.Top Step since October 2010.The work is backed by 33 years of Elliott Wave, Gann, Andrews, and Wyckoff as well as a proprietary code. Over the past 13 years the work has been almost exclusively S&P 500 with only the occasional comment about other instruments. All members are provided a daily commentary along with a matrix of support and resistance prices known as the NUMBAHS given after the commentary prose. The commentary focuses predominantly upon the day at hand but usually contains price information on larger time frame scenarios as well. Charts are provided.
At the very largest level I have been a raging bull since price exceeded 1434.44 S&P 500 CASH for the 2nd time on Jan. 2, 2013. This specific price was presented at Mr.Top Step on Jan 4, 2012 as the last price where BEARS could maintain that the rally from the 666 Mar. 9, 2009 crash low was a bull correction within an ongoing BEAR market.
The DAILY CHART attached is where the market is now in Elliott terms. The Bull market from 2009 low will end when a large red Roman Numeral V is sealed in place.
Next month and early in January you will be inundated with comments on the “January effect”, and voluminous comments about years ending in 5 (1925, 1935,1945, etc.) A word of caution, use the latter as AWARENESS but bear in mind that 2015 will only be the 10 data point in the set and that is fairly limited statistically.
The real deal will be central bank credibility. Thus far, the pushing on a string has had little impact economically.This means the most important chart in your arsenal is NOT A MARKET CHART but a chart from the St. Louis Fed on M2 growth and the VELOCITY OF MONEY.
If the central bankers retain credibility then the market will rise to 2168-2254 centered upon 2214 cash (given at Mr Top Step in November of 2013!!!!..), as a MINIMUM. When the ECB finalizes its printing plans the Banks will be ALL IN. If this is met with skepticism the market will correct 20-22% beginning in mid Dec of THIS YEAR or in the SPRING. If the bank efforts are deemed a failure the market will be facing something MUCH WORSE and the RED V will have been sealed.
BOTTOM LINE: normal is more up but a real danger exists and the moment of truth is nearer at hand and should be obvious in mid Spring. The banks are fighting deflation it is as simple as that.