Sunday Rock Blog: Once In a While We Enter Raging Bull Market Mode (IWM)

Looks like last leg up in this new bubble/bull market is getting started. Bull markets usually have the biggest gains at the beginning and the end. Remember what it was like in 2008-2010 after the lows? I bet the fed will have to radically raise interest rates before this is over, and clearly we're a ways from that. The fed continues to take the attitude that asset prices are not in bubble territory (yet). We are at least one year out from that, probably more like 2-3 years out. I think the upside could get pretty crazy, more so than the dot com bubble. I've been looking at charts all morning and they all look bullish. Small caps lead, and it looks they'll break out to new all time highs soon ($126+). I'm going to load up on calls. As a side note, if Hillary gets elected Wall street will love it, they'll go bonkers. Santa Claus rally of a generation coming.

"Wave 5: Wave five is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average investors finally buy in, right before the top. Volume is often lower in wave five than in wave three, and many momentum indicators start to show divergences (prices reach a new high but the indicators do not reach a new peak). At the end of a major bull market, bears may very well be ridiculed (recall how forecasts for a top in the stock market during 2000 were received)." -from Wikipedia

Full Disclosure: I am long small caps, including IWM via stock and options.

Yen Continuation

ChicagoStock: Wave 5

Fifth Wave?

Yesterday's breakout in the major indices brings into view the all time highs on the S&P 500 and the DJIA. As stocks continue to rally through new 52 week highs towards all time highs, investors should keep in mind that this is the third major multi-month push in the bull market that began in 2008. In terms of Elliot Wave Theory this would be the fifth and presumably final wave of the cycle. There's a very good chance that we will push up to those all time highs soon, testing the highs of the 2000 and 2007 bull market peaks (at ~1500 on S&P). While everything is 100% bullish in the short term, this fifth wave is likely going to be the end of the recent secular bull market. The direction is higher for now but I feel fairly confident that sometime later this year deflation will rear is ugly head. Be prepared.

Gravestone dojis (reversal pattern)

The stock market looks to pullback here as we enter the holidays, I tightened up my stops today, wrote some covered calls and even picked up a few shorts. Yeah, markets generally made a new high for the year and closed with gains today but I see many reversal candles out there (gravestone dojis for example), stocks seem tired. IWM tried again to retake it's 50 dma but failed. You could even say that today there was a collective failed breakout as stocks made new highs but did not close at them. From failed moves come fast moves, tomorrow will be telling.

Even the shining star of customer service (Best Buy) was not immune to the bearishness of the day. Errr, don't ask. Lets just say I won't be going back to Best Buy after a bad experience this weekend.

Disclosure: Short TNA, SPWRA