Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
US and UK Coronavirus Trend Trajectories vs Bear Market and AI Stocks Sector - 30th Mar 20
Are Gold and Silver Mirroring 1999 to 2011 Again? - 30th Mar 20
Stock Market Next Cycle Low 7th April - 30th Mar 20
United States Coronavirus Infections and Deaths Trend Forecasts Into End April 2020 - 29th Mar 20
Some Positives in a Virus Wracked World - 29th Mar 20
Expert Tips to Save on Your Business’s Office Supply Purchases - 29th Mar 20
An Investment in Life - 29th Mar 20
Sheffield Coronavirus Pandemic Infections and Deaths Forecast - 29th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter


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

6 Critical Money Making Rules