The Great Depression Fractal - Part 3 (Blow Off Top Incoming?)
Hey guys! Posting an update on my DJI analysis, since we're close to invalidating the possibility of further weakness (for the time being). As I said in my previous analysis, it was best to remain on the sidelines after the bounce from the 21000 area, since it was fairly strong. In addition, I indicated the possibility that we'd actually break the previous high, since this would still be in keeping with my great depression fractal. In fact, I was actually MORE concerned about a further rise. This actually makes me even MORE worried, as I think the crash will now end up being much more severe, once we've officially topped out. I actually hope we find resistance here and drop soon, for the integrity of the market.
IF we don't break down here and make a higher high, I expect us to rally at least to the top of the GIANT uptrend channel (the resistance there is real - just look at my chart). This currently lies in the 30000 area. If we break that resistance, we will likely have an even larger rally, and we will have to create a new long term channel. As you can see, in the late 1920's, we rallied higher before the final 90% drop.
Between February 1927 and July 1929, the DJI rose 233% from about 167 to 384. This means that we could indeed rise up to somewhere between 60-63000 before a huge collapse, if we break the recent high. This target is well above the channel resistance though, so a rise this extreme might be unlikely. I think 30K is more realistic. Either way, this would be an enormous trading opportunity, but it's unfortunately NOT what I wanted to see in the market. I would have preferred a recession now rather than later. This is far less healthy, and it just goes to show that humans have not learned to stifle their greed, and history may indeed have to repeat itself. This final bubble phase may be led by a potential Weed bubble (I can already see major news outlets starting to incite retail FOMO into this sector, even though the ideal buy in point was any time during the last two years).
Anyway, this isn't as long-winded as my previous chart. That analysis speaks for itself. This is not financial advice. This is purely my opinion and for educational purposes only.
-Victor Cobra
IF we don't break down here and make a higher high, I expect us to rally at least to the top of the GIANT uptrend channel (the resistance there is real - just look at my chart). This currently lies in the 30000 area. If we break that resistance, we will likely have an even larger rally, and we will have to create a new long term channel. As you can see, in the late 1920's, we rallied higher before the final 90% drop.
Between February 1927 and July 1929, the DJI rose 233% from about 167 to 384. This means that we could indeed rise up to somewhere between 60-63000 before a huge collapse, if we break the recent high. This target is well above the channel resistance though, so a rise this extreme might be unlikely. I think 30K is more realistic. Either way, this would be an enormous trading opportunity, but it's unfortunately NOT what I wanted to see in the market. I would have preferred a recession now rather than later. This is far less healthy, and it just goes to show that humans have not learned to stifle their greed, and history may indeed have to repeat itself. This final bubble phase may be led by a potential Weed bubble (I can already see major news outlets starting to incite retail FOMO into this sector, even though the ideal buy in point was any time during the last two years).
Anyway, this isn't as long-winded as my previous chart. That analysis speaks for itself. This is not financial advice. This is purely my opinion and for educational purposes only.
-Victor Cobra
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Previous analysis, for reference:
Comment:
Sorry, made a percentage error in this analysis. That's a FACTOR of 2.33 for the potential rise. The percentage is 129%.
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Looks like we found resistance int he low 26000 range, so we may indeed start our recession here. This is actually the BETTER case, and as I mentioned above, it would be healthier for the market overall.
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Continuing our selloff. Looks like we might not be getting our blow off top after all. A continued rise can only happen if we blast above the previous high. For now, this is a strong sell signal, since we just completed the right shoulder in a big head and shoulders pattern.
Comment:
So the selloff has been tempered, and some tech stocks are showing signs of wanting to rally higher. We could still see the blow off top scenario occurring, but only if we manage to break 26000 and hold above with high volume.
