After a tremendous bull run, recently we have seen terrible volatility in global stock markets. On a closer look, the volatility was not contagious for other assets classes, which in theory proves that these moves have been technical rather than fundamental. Investors have not been fleeing to safe heaven assets, rather to cash, cash that may be waiting on the sidelines. As labeled on the chart, the recent volume spikes and extreme volatility makes me tread more carefully, especially when you consider the fact that a buffoon is leading the most influential and powerful country in the world. Another fact to consider, is the recent articles and public opinions coming from various analysts that warn of a 'deep correction' or 'more pain to come'. However, there is an old adage on Wall Street that says 'Bottoms are an event, Tops are a process', and I fully agree with it (unless of course there are other things to consider which I definitely do not see here). So, considering the above, let's look at some hints provided by technical analysis.
On the weekly chart, price returned to the Wave, which represents a medium term definition of value. Also, around these levels we have the 200 day moving average, that lately appeared many times in the media. The Force Index is severely oversold, and the impulse turned blue. BUY!
The daily chart shows a corrective double bottom. Although price didn't reach the previous swing low, the major reversal yesterday makes me go in and buy. I wouldn't be surprised to see the market make one more move down and touch the previous swing low, however I rate that scenario as unlikely.
Target at the all time high, for the Nasdaq probably a little higher, Nasdaq always moves a bit more than the Dow does in strong up trends. Soft stop below the swing low.
Vlad, I have been an admirer of your work for a few years. You make a compelling case for the YM1. I suspect there is one more leg down---to near SPX 2500 or a 2K drop from Friday's (06 Apr) close on the DJ30. Either way, I agree that we are close to an uptrend; reversing the February drop. Longer term (2-5 years), there are a lot of signals saying a big downtrend is coming. Please keep posting your excellent work.
vlad.adrian
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@OldGoat, OltGoat, thank you for your kind words. My knockout level for my options are at 22000 for DJ, so even if there will be another leg down, I am fully protected. Take care!