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

This Stock Market Stinks - But Not Why You May Think

Stock-Markets / Stock Markets 2020 Jul 22, 2020 - 04:46 PM GMT

By: Avi_Gilburt


I have been on vacation this last week, and when I had some downtime and the family was asleep, one of the activities in which I engaged was to peruse the articles written over the last week on the market. (Yea, I know... call me a nerd if you like). And, during my reading, I came to the realization that there is certainly a lot of manure being flung around of late.

Ultimately, I am just shocked that there are so many perspectives being presented as support for a bearish or bullish position that make it so clear that the author is not burdened by the facts.

Let’s take Covid for example. So many are so certain that Covid is what elicited selling in the market. Yet, the worst news about Covid was seen during the massive 50% rally in the market. In fact, the highest death rates were being reported daily during that rally. Moreover, when the infection rate started spiking over the last several weeks, did the stock market not rally during that same time? So, let’s be intellectually honest about the how Covid has affected the stock market.

Yet, pointing out these facts does not support the common narrative, so we will simply have to ignore the facts in order to support what most “believe” about the market.

Then there are those who truly believe that the Fed is the cause for this rally, whereas Covid would have certainly tanked us. I addressed this fallacy in one of my recent articles, so I won’t bother addressing it again. (Sentiment Speaks: I Fought The Fed... And I Won)

And, as we saw news about how the Fed has been pulling back their liquidity over the last few weeks, the market has continued higher. So, again, the facts do not support most people’s “belief” about the Fed driving this rally.

Moreover, there are those who still think the ‘economy’ and the market are one and the same. And, since the economy is not doing well in their eyes, then the stock market must be wrong. Are you amongst this often-wrong group? Just about every week, we see at least one article like this one: “The Real Economy Has A Message For Stocks - And It's Not Bullish.” Yet, the market really has not cared. And, if you do not understand why, I suggest you read this article I wrote two weeks ago addressing this issue: Sentiment Speaks: Stop Believing The 'Economy' Is The Same As The Stock Market.

Now, we are starting to hear about how the election will affect the market. This is another beauty. It was only four years ago when everyone was so certain that a Trump win would crash the market. Yet, I was pounding the table in November of 2016 that the market was projecting to 2600+ (on the way to 3000) “no matter who wins the election.”

While there are questions as to whether it was actually said by Einstein, I think we can all recognize that doing the same thing over and over but expecting a different result can be viewed as evidence of insanity. And, by this standard, do you want to be considered insane?

Lastly, one of the perspectives I love the most are from those that are trying to glean what the stock market is going to do based upon gold. Remember that old saying that “gold is a hedge for equity market weakness?” Well, forget it. It is yet another fallacy which is not supported by the facts of history. I mean, just look at gold in 2020 as one example. And, in past articles, I have outlined many more times frames throughout history which blow this fallacy out of the water.

Yet, if you believe this nonsense about gold, you need to follow Yoda:

While there are certainly a lot of perspectives being presented about the market, it really is amazing how the authors of those perspectives are not burdened by any of the actual facts. Have you not yet come to the realization that these are the wrong perspectives to take about the market if you want to be on the correct side of the market trend?

So, allow me to present to you my perspective and I can assure you that it is not based upon alternative facts, nor do I ignore the actual facts about the market. However, my perspective is based upon my analysis of market sentiment, which has had me correctly bullish since the end of March. And, that analysis is suggesting that we are going to be seeing a bout of market weakness over the coming months which will likely take us below the level we are at today. While the market may still test the all-time market highs, I think there is downside risk over the coming 3-4 months, and I expect we will see levels lower than where we reside today.

And, even though I am seeing the set up for that weakness over the coming months, I am still quite certain many will point to the most popular reason of the day to suggest it “caused” that market weakness. For now, who knows what that news will be!? Maybe it will be another wave of Covid. Maybe it will be a political issue. Maybe it will be an international issue. It is impossible to tell you what it will be. But, I can assure you the media and pundits will certainly point to negative news during a market decline and present it as the “certain” cause of the decline.

So, while I cannot predict what the news will be, and after being correctly bullish these last few months, I can tell you that I see a strong probability for market weakness over the coming months. But, if the set up for market weakness is developing, does the underlying news really matter?

Unfortunately, you are so used to seeing market action attributed to the news of the day that it is the only thing that makes sense to you. You are led to believe that the news of the day comes out and the market responds in kind. To be honest, the great majority of the time the market makes its move, and the news of the day is fit to the market action retrospectively. Good luck trying to invest on that basis.

But, what does it mean when the market provides us a strong indication for a market decline without knowing the news in advance? Does it not highlight how superficial the news of the day really is in the grand scheme of events? In fact, it is quite a superficial perspective on the market, yet, this is what is taken as market analysis today. Sad, really.

Two weeks ago, I outlined to the members of ElliottWaveTrader that I expected a rally that was going to at least test the 3188SPX resistance. Later that week, the market struck a high of 3184SPX and proceeded to pullback. Yes, I was off by a whole 4 points.

I was then pounding the table that the 3115SPX level was the most important level of support to guide us as to whether the market has indeed topped at 3233SPX, or if we would attempt a run at the all-time high before we see the larger degree bout of weakness I am still expecting. The market then proceeded to pullback and strike a low of 3115.70. Since then, we have made a marginally higher high over 3233SPX, but we still do not look done to the upside.

So, in the coming week, as the market presents today, I expect that the next minimum target of 3260SPX will be struck as long as the market does not break below 3115SPX. And, should we strike that 3260SPX minimum next target, then support will be moved up during the week. As long as support continues to hold, I will continue to raise support to our next Fibonacci Pinball structure levels until we reach the prior all-time highs.

Alternatively, a sustained break of the 3115SPX level in the coming week would have me looking down to the 2900SPX region sooner rather than later. (If you want to understand why alternative plans are important, ask yourself what army general ever goes into battle without a contingency plan.)

The next week or two will likely provide us with more whipsaw, even if we do hit our next higher target region. So, I suggest you strap yourself in as it will likely continue to be a wild ride. But, be patient. If you did not take advantage of the buying opportunity at the 2200SPX region I was expecting last year, we will likely be presented with another buying opportunity over the coming months before we begin our rally into 2021 over the 4000 region.

Consider how crazy you thought I was when I was suggesting we were going to rally over 4000 when we were down in the 2200SPX region. Does not sound so crazy anymore (smile)!

If you want to read a bit more about why our methodology is often so accurate, feel free to read these prior articles explaining our methodology:

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