The Mars Market Update — Live Research

On December 10th we got a hard test of the October lows in US equity indices. The SPX, Dow and Russell all made new cycle lows while the Nasdaq indices did not. This has important implications and confirms our big picture outlook with the new cycle lows confirming that the October decline was only wave 1 or A of a bigger picture decline. Given today's price action we have three potential near term wave counts but ALL lead to a breakdown of the H&S top markets have formed over the past 12...

NB: Due to last week's holiday, the COT data has not yet been released by the CFTC. We will be updating charts when the sentiment data is made available. Last week, we were looking for the bear market to reassert itself once the wave (c) ending rally completed. While we fell short of ideal upside targets, the decline confirmed our bearish outlook. All indices are now testing major support, a clear break of which should lead to an accelerated decline in wave (iii) of 3 consistent with our...

Last week, the equity bulls made their stand at support as anticipated.  With the assistance of a dovish Powell, equities launched higher in what is expected to be wave (c) of a larger corrective rally. Over the weekend, the US / China trade tensions also subsided adding further fuel to the relief rally.  This week will likely be a key test for the bigger picture market structure as equities rally towards our wave (c) targets from where we should see the bear market reassert itself. The...

NB: I am travelling next week so the update is getting posted early in advance. Please note that the COT data will not be included as it doesn't get released until next week due to the Thanksgiving holiday. This week equities traded lower as expected to retest the October lows - while the Nasdaq Indices have already broken the October lows, they are yet to be confirmed by the broader indices. Our thesis remains the same - the bigger picture trend in equity markets remains down until proven...

Last week we got the impulsive decline we had been looking for into Fib support for US equities. From a big picture perspective we now have 5 waves down and 3 waves up terminating at 61.8% Fib resistance indicating a bigger picture change in trend to down. The question is whether the 3 wave rally was ALL of wave 2 (red count) or part of a more complex a-b-c correction (blue alternate). Either way, we should expect a decline to retest the October lows. The US bond market is now at a key...

Last week US equities rallied in 3 waves into our targeted resistance areas. Minimum conditions have been met for a counter trend rally so the door is now open for the bears - the question is whether this rally was ALL of wave 2/B or only wave (a) of a more complex correction. Importantly, both our highest probability Base Case and Bull Case remain valid. The micro structure of last week's rally is less clear and keeps the door open for more complicated wave counts. The problem is that some...

Last week we got the strong count trend rally we were looking for - our disciplined process enables us to take the emotion out of the market. We were bearish at the new ATH's and bullish at the panic lows early last week. This week will be important for the run up into year-end with the US mid-term elections either enabling or disabling Trump's immediate agenda. In this update we have undertaken scenario analysis to prepare for the market's reaction to the mid-terms. So far the markets...

Last week saw a continuation of the bear market trend with no evidence of a tradable low. The market will need to turn higher early this week to maintain bullish near term momentum divergence. What we have from a big picture perspective: a potentially completed 5 wave rally from the 2009 and 2016 lows momentum divergence at new ATH's on a weekly and daily basis consistent with a final 5th wave rally (ending wave) an impulsive 5 wave decline into previous triangle area support signalling a...

Last week we warned that any rally in the US equity indices off 50 week sma support was likely to be corrective (a-b-c) as the bigger picture trend remains down. The question is whether last week's rally was ALL of wave 2/B or merely the first leg of a larger corrective rally. Importantly, the weekly 50 sma support continues to hold for the SPX, Dow and Nasdaq indices while the Russell has clearly broken down. Importantly, both the US dollar and bonds continue to hold near term support and...

Note: I will be visiting family this week so while I will be contactable, my responses may be delayed. Last week we got the US equity break we had been looking for with follow through declines tagging initial 200 day sma downside targets, then breaking lower to test our secondary 50 week sma targets highlighted in late week tweets. While the consensus was looking higher for equities we correctly faded the herd. We remain bearish equities. What if we are right and equity markets potentially...