Sentiment Speaks: The Stock Market Is Over

I don’t know about you, but I am sick and tired of reading article after article telling me how inflation is going to kill our stock market, how the Fed tapering is going to kill our stock market, or how the rising dollar is going to kill our stock market. None of these perspectives are consistent or even accurate when taken from a historical perspective.

As I outlined in my last article, the entire premise of inflation is that there are many more dollars chasing after a limited number of assets. Should this not normally cause the stock market to rally?

Moreover, anyone that claims that the Fed backing away from the market is a bearish indication has clearly not even bothered to look at recent history. In late 2015 into 2016, the Fed began backing away from the market, yet the stock market rallied 60% in an almost straight line higher. Isn’t it a shame when narratives that are constantly proffered to the masses have no basis in fact or history? But, since it sounds good, many investors buy into this fallacy.

But, what is funny is that when we rallied higher this past week after the Fed announced its continued intention to taper, we saw titles to articles such as “Stocks rally as investors shrug off Fed tapering signals.” Yet, so many of you are so certain that the Fed backing away from the market is a bearish indication for the market.

Lastly, I am seeing many claims that the current rallying dollar is bad for the stock market. I have two issues with this perspective. First, during inflation, should the dollar not be declining rather than rising? And, second, has anyone even cared to look at what the market did during 2011-2018 when the dollar rallied from 74 to 103+? For those that have not bothered to look, both the stock market and the dollar rallied together for those seven years.

It really is a shame when so many analysts and article writers are simply not burdened by the facts of history. It is so much easier to sell a commonly accepted fallacious narrative than actually deal with the true facts on the ground.

When asked why he changed his opinion, John Maynard Keynes was purported to have responded – “when the facts change, I change my opinion. What do you do, sir?”

Yet, do all the bearish article writers ever reconsider their bearish perspectives when, week after week, market price action continues to prove them wrong? Do you?

So, with all these certainly negative indications for the stock market, maybe we should simply declare that the lifetime of the stock market is over, as there is nothing positive to be able to push the market higher.

As for me, I am still looking up to our next target in the 4900-5000SPX region as we look towards 2022.

The funny thing is that there is never a shortage of bears that tell me how wrong I am. I was told I was wrong for looking to 4000 from 2200SPX back in March of 2020. I was again told I was wrong for next looking to 4250 from 4000. And, I was again told I was wrong for looking to 4440-4600SPX from 4250SPX.

But, the real funny thing is that I was then told how wrong I was for expecting a 200-300 point pullback from the 4440-4600SPX region. Well, it seems that the more I am viewed as wrong, the more money I and my subscribers seem to make, as I think we just got the minimum pullback expectation I have recently warned you about. (smile)

So, please feel free to tell me how wrong I am for next expecting us to rally to the 4900/5000SPX region as we look towards 2022. Of course, I can always be wrong. But, the pattern we have been tracking for years has been quite accurate each step of the way.

Yet, what many of you still have not accepted is that the stock market and the economy are not the same thing. And, if the 2020 rally did not convince you, then it is likely nothing ever will.

As far as the market is concerned, while we have seen the 200-point pullback recently which I was expecting before we rally to 4900SPX, I am going to need to see a 5-wave rally completed through the 4500SPX region to confirm the rally to 4900 is in progress. In fact, if the market breaks down below the 4420SPX region in impulsive fashion (an Elliott Wave term of art meaning a 5-wave structure) before we rally to complete an initial 5-wave structure over 4500SPX, then we can see one more loop lower and another 200+ point decline before we are ready to rally to 4900SPX.

But, don’t worry. You do not have to get FOMO (fear of missing out) just yet. Should we complete that 5-wave structure over 4500SPX, the market will likely then provide us with a corrective pullback back into the 4400-4450SPX region before we are ready for that rally to 4900SPX.

So, while many of you will continue to focus on the debt ceiling, or on an impending government shutdown, or on more Covid news, or on more inflation news, or on a myriad of other issues you deem important about the market, I will continue to follow market structure which is a lot more of a reliable determinative factor regarding market direction than anything else. And, again, if you have not learned the truth of my last statement yet, then you have clearly not been paying attention for the last several years.