Even if the small small small percentage probability fulfills and the bear-market is completed now, the big crisis will just move some months/years into the future which will make it just increasingly more heavier damageful and devastational therefore we need to be prepared for these pending events which will more likely contribute in this current distributional cycle than after another bull-trap to the upside. This fact should bring us to the conclusion that we need to take the right action in such a market-environment which smart traders and investors should always prefer alongside the illogical speculative approach and therefore take the opportunity when they arise. As already mentioned in past analysis there are some sectors in the stock market that will profit from the crash like food, pharmacy or armory which are anticyclical to the market, when considering the long-side these truffles need to be picked out in this market environment.
In my chart, we are looking at the weekly time-frame and as you can see there the whole distributional events in the current Wyckoff cycle are on the verge from phase B to phase C currently which providing valuable information because of the events we can expect to happen in phase C. At the moment the whole bull-rally which we see is suspected to be a huge bull-flag trapping many unadvanced people before taking the huge legs down which will come in phase C to phase D.
Phase A: This phase was actually the weakening of the whole bull-market we had since 2009, there the increasing expectation for a possible markdown phase entered the picture and the first serious supply entering the market in this phase. We saw the first heavy spikes entering and the market provided the overall buying climax in the structure and after it the long sideways trending market with several attempts to test the demand-value and form the next heavy wave to the upside which did not provide and resulted in an automatic rally to the downside before we entered phase B.
Phase B: In the structure we had a long phase B with decreasing momentum of the bulls before the overall markdown and corona-fears hit the market, in the phase from December 18 to February this year we saw some beginning signs that a new awaited market will develop when the market gets damaged. The Sign Of Weakness in Phase B provided a lower low before the final attempt for a continuation of the bull-market failed in the Up Thrust which trapped many long investors and traders in their positions selling shares to large institutional, this was the logical event after the weakening signs in phase A before the heavy volatile move to the downside came.
Phase C: Now this is the phase which we will enter soon, it is important in the structure because it is literally a bull-trap trapping breakout traders in their positions and selling them to a large institutions. This is exactly what we hear in the news now, many people taking advantage of the counterreaction and calling it an end of the bear-market but this is a fatal mistake, the overall phase C will match perfectly with its upcoming Last Point Of Supply which comes when the demand we have at the moment weakens in the structure set up for a leg to the downside. After the first demand-weakness established it lays ground to phase D in the structure.
Phase D: This phase will provide confusion in the markets with Signs Of Weakness and Last Points Of Supply, it will be a time where we see a consolidation movement in the stock-market confusing many people as if the bull-market is now really going on or not. After the last gaps of demand have risen in phase C we will increasingly see weakness and pressure, in this phase most of the institutional will be out of the market lying the ground for retail to sell below the last in the structure.
Phase E: This phase unfolds the heavy and significant selling pressure to the downside, the price will leave the trading range and trapping many people in its position to the downside. We will see a high and selling here which will spread out in the media and activates the meaningful retail selling, in this phase the opportunity for trade on the short-site will be huge as many companies struggling in the global economy and there will be insolvent companies on the mass scale which is actually a good environment for smart short-selling traders to profit from it. The importance of this phase is also that it marks the last point in the distributional events and new accumulational events can occur, you can see this level marked in orange at my chart.
So this is the actual situation we are currently facing, in the months to come we will see how it will play out but one thing is sure, the real economy still struggling with the corona-restriction and have a hard time to come back to status quo this means the pressure can gain when the ground becomes more shaky. The whole rally we would see when the market "stopped" the bull-markets and continues will be extremely speculative and all serious smart investors will stay out of the market and prefer the safety of cash, only the fact that investors like warren buffet are and selling investments makes the scenario and therefore its following Wyckoff distributional events more legit, in this case, we need to be prepared and take the proper action with trades on the short-side when the opportunities arise.
In this manner this should give a good view, thanks for watching, support for more insights, and good week everybody!
Comfort and prosperity have never enriched the world as much as adversity has.
Information provided is for educational purposes only and should not be used to take action in the markets.