What is happening?
Market has hit a milestone at 2759.2, or our 1.382 retrace from the 2009 lows, this has been our approach and we have been right just by following this macro path, so when it stops from being accurate we will reconsider it, but at the moment, we must simply adjust our supports to try to understand what might happen next.
Regrettably in such a big wave count, the smallest variation could affect the projections by a range of 30 points, so I rather to post for you these two lines: first support at 2719.2 (link) and second support at 2705.5 (link). In order to start feeling uneasy one of these lines would have to break, and sorry if some our past updates have leaded you to believe we are ubber bulls, we are not, simply we rather to view the big picture and wait for market to tell us if our bearish/bullish approaches are right, maintaining a considerable exposure on the long side until reality prove us wrong, and at this moment in time, a 20% pullback is, to our eyes unlikely, so stop auto-threatening you while at least 2705.5 is not broken, it is not necessary.
For as long as these two lines are not broken consistently, I consider 3052 area is reasonable probable, with upper extensions for this projection to 3267.4.
Currently, the T-line is at 2727.5 (link) and the Wolverine line is at 2681 (link). Looking at Charts Below, the daily chart has -462 retrace at 2707.5 and the weekly chart has 50% candle at 2712.91, while we could overshoot our supports at 2705 this potential retrace could be short lived.
Looking at net dollar chart, TNA should close under 70.27 to indicate this long consolidation could lead us to a break down.
For NDX would be necessary a break below 6478 to indicate a top (link), and is on NDX where big bets should be placed, in our humble opinion, and our top pick should be, no other than FB for growth, this, while 182 holds; and of course, AAPL above 155 and MSFT above 84, for the dividend without forgetting GOOGL while 1044-1021 lines hold for growth on GOOGL and AMZN for 1555 for as long as 1172 holds.
Ideal extension for NDX should be 7305 before consolidation or pull back.
This is our approach and we should well reminding what we said on September 9th, 2017:
Here is a link to Joe Davis, Global Chief Economist & Head of Investment Strategy Group at Vanguard: Prepare for lower expected returns.
If market is going to be tough the next five years, but is being a good market today, let’s not build a top where it is not, and let’s not short while main supports are not broken, instead let’s take advantage of pullbacks to make money now that is relatively easy, because there will come the days when is going to be hard.
Have in mind that pullbacks during third waves have not be deep and market is within a 3rd wave from the 2009 lows.