Black Friday

Written by William Kurtz

‘Twas the day after Thanksgiving. At Struthers & Crouse, few creatures were stirring, not even a spouse.
(We’ve read that it was slow going at the stores on Black Friday).

I’m just a whisker short of calling a Top. I will do that when the Dow and the S&P 500 fall below their Lows of today without first having risen above their Highs of last Friday. Even so, the evidence that a Top has been made, on Black Friday, and that the major underlying trend has switched from Up to Down, is extraordinarily powerful.

Both the Dow and the S&P 500 have traced out very visible five-wave patterns to today’s Lows, which are the necessary markers for identification of the direction of trend. Now, they appear to be in the process of tracing out the requisite three-wave upside counter-trend moves. In the Dow, the top of that three-wave move should settle in somewhere between 15923.33 and 15980 or a little higher; remotely possibly as high as 16040. Neither the Dow nor the S&P 500 should surpass last Friday’s Highs.

After posting those subsidiary peaks, the Dow and the S&P 500 should turn down hard. We will call a Top (as a certainty) when they whizz past today’s Lows on the way down. Apart from the wave patterns, the argument is powerful in support of the proposition that the Top is already in. The average Investment Adviser is leveraged Long, which happens very infrequently. Within the Investment Adviser fraternity, the bulls outnumber the bears four to one. This bespeaks an extraordinarily bearish condition. In common parlance, this is “an accident waiting to happen.” Don’t walk under ladders for a while. Especially don’t walk on sidewalks in front of skyscrapers under construction, because the cable that suspends that bucketful of wet concrete 26 stories over your head is about to snap.