We have been writing for many months that the Equity markets are forming a major multi decade top. The early evidence we saw was the diverging behavior among smaller indices, such as the Russell 2000, S&P 600 Small Cap Index and the Dow Jones Transportation Average, unable to confirm the highs recorded on the broader indices such as the Dow Jones Industrial Average and the S&P 500. Moreover, we have constantly warned our subscribers the sentiment readings from the Daily Sentiment Index to Investors Intelligence Advisor Survey registering an extreme level of record bullishness. We further highlighted the multi extreme measures from the CBOE’s put to call ratio, registering record low put buying. Although we have been early on the market topping call, it is very important to be ultimately correct on the major inflection points than just following the mainstream punditry whom many called for continuation of the bull market that is 10 years in the making. The Fed has investors back mentality cannot last forever, the central banks cannot solve the current crisis with more money printing and the most prescient tool called Elliott Wave has been warning us all to be very careful. It now looks like Elliott Wave knew something like Coronavirus was coming as we were mulling over what news will be the trigger point for the next big selloff. The only unfortunate part of Elliott Wave analysis is that it is not a great timing tool, thus we were early on the call but what is most important here is getting the calls ultimately right and that we have accomplished based on the selling onslaught we have witnessed so far.
The chart above illustrates from February 18th Bitcoin has been mimicking the S&P 500’s movement. During the geopolitical tension with Iran Bitcoin and Gold rallied together proving Bitcoin can be considered a Safe Haven but it has not been so safe during the Coronavirus outbreak. The ominous signs are rising in Bitcoin as the number one Cryptocurrency has been trading in tandem with the S&P 500 for the past few weeks. Based on the current count on the S&P 500 (see below) we are forecasting a much severe decline ahead for the US’s major index. Will Bitcoin decouple or is this a new trend? Please join us and follow our Elliott Wave count, we will guide you every step of the way.