Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Small Cap Stocks Hold The Key To The Rest Of 2020 And Beyond

Stock-Markets / Stock Markets 2020 Mar 15, 2020 - 05:44 PM GMT

By: Avi_Gilburt


Right before I had to undergo a surgery at the end of the first week of February, I began to pen an article regarding the potential bearish set up in IWM as a follow up to the bearish analysis I posted about EEM earlier that week entitled “Sentiment Speaks: Emerging Markets Look Sick.”

In fact, I have used the same title in this article which was intended for the bearish article I began writing in early February about IWM. Unfortunately, I got too busy to complete that article, but needless to say, the structure in IWM remained quite troubling as long as it maintained below 174.

You see, while the SPX was making new highs, both IWM and EEM were presenting rather ominous looking patterns. And, as I was telling the members of, either IWM was going to see a strong catch-up move through the 174 level (which I would join on a break out to the long side), or it was going to drop down to the 123 region and pull the rest of the market down with it.

Moreover, as I had posted in the EEM analysis published on Seeking Alpha in early February, EEM was setting up a 1-2 downside structure which was going to be pointing us much lower in the coming months of 2020.

So, the question with which we were grappling at the end of 2019 and early 2020 is which of these markets were telling the truth – IWM/EEM or the SPX?

If the SPX would have mirrored the patterns of IWM and EEM, we should not have broken out over the 3040 maximum resistance expectation I had of it. This is what threw off my analysis from November through February on the SPX, whereas the analysis on EEM and IWM remained quite consistent. And, when the SPX followed through over 3150, it was presenting a much more bullish posture, as long as it retained support over 3150, whereas IWM and EEM were still presenting a much more potentially bearish posture. And, this is why so many of you took me to task for being wrong regarding my equity market analysis. Yet, as we see now, maintaining a cautious stance was not wholly inaccurate.

But, again, until early February, the question remained as to which equity charts were telling the truth. And this was the question which caused me great angst during the late 2019 and early 2020 period of time. It certainly made me struggle in my analysis of the SPX more than I have in the entire 9 years I have been writing public articles. And, again, many of you took me to task for maintaining the cash I raised around 2880SPX and putting it into TLT in the fall of 2018. But, my money has been quite happy in TLT since that time, and is now sitting in cash and available to re-deploy into the equity market.

Back in February, when the SPX approached the 3400SPX region, we began looking for another pullback, with initial support at 3280, followed by support down to the 3100-55 region. When it began to break support, the SPX won the award for the “fakeout-of-the-year” for both 2019 and 2020, whereas IWM and the EEM charts were telling the truth the whole time.

And as I kept noting to the members of, until IWM confirms the SPX move, I was unwilling to join the upside in the market in an aggressive fashion.

So here we stand with both EEM and IWM having pulled the market down and the SPX following along. In one week, the market has erased all the profits seen during the prior 5 months, which was the same period of time through which I was struggling in my SPX analysis. Moreover, in three weeks' time, we have erased a year of gains. Yet, all the profits we have earned from being in TLT have allowed us to significantly perform better than most in the equity market as we sit here today with the benefit of hindsight.

While I am certainly not here to tell you that I was right in missing the rally from 2900-3400 in the SPX, I am here to tell you that our Fibonacci Pinball mythology has kept me out of situations like this more times in the past than I can even enumerate. While there are times that I may miss a market move, the long-term track record that we have attained with our methodology has far outweighed the moves we have missed.

So, while there is no such thing as perfection in the equity market, I am quite happy with the manner in which our methodology has worked for us over the years, even though we have missed some moves. And, anyone who thinks that they can garner every move offered by the market is seriously fooling themselves. Yet, in the end, we are now sitting in a better posture than most in the market, as we have significant cash available to deploy, whereas most in the market simply rode this back down as they were paralyzed in their long positions.

Yet, the importance of this decline cannot be understated. It has now clarified why I have been struggling with my analysis these last several months, and it also appropriately supports my expectations for the next 3-5 years in the equity market.

You see, corrective structures take shape as a 3-wave event, which we label as an a-b-c move. The move down in IWM into its December 2018 low was the a-wave of that correction, the rally back up towards 170 was the b-wave of that correction, and we are now likely within the c-wave of this correction. In fact, I have had the 123 region as my ideal target zone for this correction in IWM for over half a year, and we are now a stones through away from that target as I write this article. In fact, based upon the current structure, there is growing potential to drop as deep as the 105-111 region before this correction completes, and the action we see over the coming week will give us a better understanding of that potential.

Ultimately, this should be viewed as good news by long term investors. As it stands now, my long-term upside target for IWM is in the 210-240 region. So, it is likely we are going to see a major buying opportunity in 2020, which, to be honest, is something I actually expected to see happen several months ago.

So, while I am quite certain many will still attempt to take me to task in the comment section below, those that have earned their profits with our work in TLT since we called the bottom in November of 2018 are sitting quite pretty with that money in cash to now take advantage of the opportunity being presented to us over the coming weeks/months. And when I hear about the hedge funds that have been blowing up of late, it gives me a warm and fuzzy feeling that I have been able to keep my clients safe and out of this mess.

Avi Gilburt is a widely followed Elliott Wave analyst and founder of, a live trading room featuring his analysis on the S&P 500, precious metals, oil & USD, plus a team of analysts covering a range of other markets. He recently founded, a live forum featuring some of the top fundamental analysts online today to showcase research and elevate discussion for traders & investors interested in fundamental rather than technical analysis.

© 2020 Copyright Avi Gilburt - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in