FEB 26, 2018
The last time Clive Maund called the top on the broader stock market rally, it immediately fell 10%. And now he’s doing it again.
This is a very timely point to remind ourselves that when the market broke down and plunged a few weeks ago, it did so from a parabolic blowoff top, or as we had defined it, a 4-arc Fan Ascent, which amounts to the same thing for practical purposes, a top that was accompanied by all oscillators and indicators being at record overbought extremes.
While this top may not look all that extreme compared to something like Bitcoin, we should keep in mind that the broad US stock market is infinitely greater in magnitude than something like Bitcoin, and therefore vast amounts of capital are required to create any kind of parabolic blowoff. Given that there was a long lead in to this parabolic blowoff it means that the stock market is done – finished – and the bell has been rung on a new bear market.
There is talk going around that the Fed “realized the error of its ways”, and would backtrack on QT (Quantitative Tightening) and resume QE and happy days would be here again. There’s only one problem with that argument, and it’s a big one, which is that if they try to resume that course in the face of gargantuan and fast-rising deficits, they will crash the dollar and send rates through the roof, causing the economy to implode anyway.
Going back to QE just won’t work and that means the jig is up on this bull market, which of course is what we would expect after a parabolic blowoff top.
ORIGINAL SOURCE: BROAD US STOCKMARKET update - IN POSITION FOR DOWNWAVE NUMBER 2... by Clive Maund at Clive Maund on 2/24/18