On 03/26/20 I posted on this site "Important Bottom in Place - Super Bullish Rally Underway. Subsequently I stayed bullish until July 20, 2020 when I issued a yellow alert - caution that an intermediate sized correction could be underway. The decline never happened, on August 6, 2020 I was back to bullish. When 2021 began I suspected that a major peak in US stocks could be forming. There were a few times it looked like the top was very near, especially when the SPX was at a major resistance point of 4008. The SPX blew beyond that supposed resistance. Now in May 2021 the bearish evidence is so overwhelming that I'm issuing a rare RED ALERT! Fully bearish on US stocks. The last time I issued a red alert was my 04/19/21 post "Massive Bubble May Have Burst". That was a post about Bitcoin in US Dollars (BTCUSD).
There's so much bearish evidence that it would take me several posts to give a full explanation. The detailed analysis can be viewed in the other areas where I write.
These are the main bearish points.
US stocks are seasonally bearish from late April/early May until October. The massive SPX rally from March 2020 overpowered seasonality in 2020. The phase after October 2020 has brought the SPX to 93% above the March 2020 bottom. This huge move in just 14 months is almost unprecedented and a perfect example of a market moving too far too fast. The SPX rally high point came on May 7, 2021 the extreme end of the prior bullish season.
The RSI reveals that momentum of the rally is lagging. At the May 7 top daily RSI had a double bearish divergence. There are bearish divergences on the SPX weekly and monthly RSI.
Margin debt for US stocks is at an all-time high exceeding levels reached at the last major US stock market top in October 2007. High margin debt is a sign of excessive bullishness and is viewed as a contrary indicator.
Five Intermediate degree Elliott waves up from March 2020 can be counted as complete. Short-term there are five-waves down from the May 7 top and the subsequent rally was in a corrective three-wave. There's a high probability the SPX could decline sharply in the last week of May 2021.
Time has run out for the stock market bulls, the bear appears to be ready to take control. The spectacular 2020 to 2021 rally was smooth and steady - a blessing on the way up, but it could be a curse on the way down. There's no significant support levels for the bulls to defend, its possible the entire 2020 to 2021 rally could be completely retraced before the end of 2021.
This is a RED ALERT!
There's so much bearish evidence that it would take me several posts to give a full explanation. The detailed analysis can be viewed in the other areas where I write.
These are the main bearish points.
US stocks are seasonally bearish from late April/early May until October. The massive SPX rally from March 2020 overpowered seasonality in 2020. The phase after October 2020 has brought the SPX to 93% above the March 2020 bottom. This huge move in just 14 months is almost unprecedented and a perfect example of a market moving too far too fast. The SPX rally high point came on May 7, 2021 the extreme end of the prior bullish season.
The RSI reveals that momentum of the rally is lagging. At the May 7 top daily RSI had a double bearish divergence. There are bearish divergences on the SPX weekly and monthly RSI.
Margin debt for US stocks is at an all-time high exceeding levels reached at the last major US stock market top in October 2007. High margin debt is a sign of excessive bullishness and is viewed as a contrary indicator.
Five Intermediate degree Elliott waves up from March 2020 can be counted as complete. Short-term there are five-waves down from the May 7 top and the subsequent rally was in a corrective three-wave. There's a high probability the SPX could decline sharply in the last week of May 2021.
Time has run out for the stock market bulls, the bear appears to be ready to take control. The spectacular 2020 to 2021 rally was smooth and steady - a blessing on the way up, but it could be a curse on the way down. There's no significant support levels for the bulls to defend, its possible the entire 2020 to 2021 rally could be completely retraced before the end of 2021.
This is a RED ALERT!