McHugh this day, fresh off of the e-mail tray
Gold rose 13.1 Monday, February 28th, with Silver rose 0.35 while Mining stocks fell 0.49. Take a look at the charts on page 58. Gold and its ETF GLD have both completed sideways triangles from 2020, and Gold has broken out decisively above this triangle. Generally, the direction of prices headed into symmetrical triangles is the direction they leave, which in present case means up. Gold's initial upside price target from this pattern is 2,350, with GLD, its ETF, headed toward 215, both targets likely to be reached by the end of 2022 or early 2023. A steady rise should be evident for most of this year, with occasional corrective declines along the way higher. Mining stocks are very close to an upside breakout from their two year declining trend-channel, shown in chart on page 64. If the HUI can break out of this channel, above 300, its next stop should be 380, with a further upside of 500.
Today's Market Comments:
When I consider the hugely Bearish charts we have been tracking and presenting for months, even years, and witness the events that have accompanied plunges these charts have predicted, the COVID lockdown and pandemic and crash of 2020; the historic hyperinflation that has the Fed twisted into a pretzel; historic shortages of labor and products; and now the start of World War III as Russia invades Ukraine, drawing-in NATO countries through a response of economic sanctions and military assistance against Russia, which could escalate broadly into much worse, I am struck by the fact that technical analysis of markets does an amazing job of telling us what is going to happen -- but not how it is going to happen. For example, our International Markets newsletter has been tracking Russia's stock market with a chart warning that a powerful stock market decline was coming to the Russian market. It has, crashing an astonishing 68 percent this year, crippling the Russian economy. But the chart did not tell us that they would invade Ukraine. Our work that I included in my book, The Coming Economic Ice Age, noted that world wars almost always accompany the conclusion of Megaphone (a.k.a Jaws of Death) patterns. Once again, we see this.
In the chart on page 33, we see that the Wilshire 5000, a composite that represents essentially the entire U.S. stock market, plunged 7,714.44, 15.7 percent, from its all-time high at 49,089.39, on November 5th, 2021 through its 41,374.95 bottom on February 24th, 2022.
$7.7 Trillion of wealth was wiped out in just four months. This cancelled out most of the Quantitative Easing Monetary Dollar printing the Fed pushed into the economy over the past two years -- in just four months.
A U.S. stock market crash just happened. It was not just a correction. Corrections are 10 percent. This was much worse. It was a crash. Crashes are defined as plunges that shave 20 percent or more off the stock market. Some consider a crash a 15 percent decline.
How would we characteristic this recent crash?
Here is what we know:
1. The stock market just crashed. It happened.
2. This stock market crash was predictable.
3. It was orderly.
4. It was relatively mild.
5. It will not be the only stock market crash of 2022 or 2023.
Was this stock market crash predictable? Yes, it was. Take a look at the many charts in tonight's newsletter.
At the beginning of 2022, the Industrials had just completed a textbook perfect Megaphone topping pattern, which we have dubbed the Jaws of Death pattern, as it looks like a shark's jaws about to devour its prey. Stocks always decline from these patterns, and they decline hard. Further, their downside price target is usually the bottom of the declining boundary line. The Megaphone pattern finished, and then stocks crashed, right on schedule.
However, what needs to be taken seriously is that the Industrials did not come close to reaching the downside target for this pattern. Not even close. The downside price target is 12,000, not the 32,000 it reached. This suggests more downside is coming.
The initial five-wave decline from their all-time highs was just the first larger degree wave of five more waves to come. This means there will be at least two more stock market crashes, wave 3-down and wave 5-down inside this developing Bear market.
Stocks have started short-term corrective wave 2's on February 24th, 2022. This corrective rally is fast moving, so could finish within weeks. If so, it means a second stock market crash, wave 3-down, is not far off, and could be an early to mid-2022 event. Since wave 3's are typically larger than wave 1's, often significantly larger, this next stock market crash will make what we just saw seem comparatively gentle. Because it will come as wave 3-down, it will likely not be orderly. We could see a waterfall drop.
But let's look at the S&P 500's Jaws of Death mega topping pattern from 1986, shown in the chart on page 41, which also overlaps a Rising Bearish Wedge pattern from 1986. These patterns covered the entirety of Cycle degree wave V-up Bull market. They also completed Supercycle degree wave V, and also completed the multi-century Grand Supercycle degree wave {III} Bull market. It is the end of a short-term, Intermediate term, and also long-term Bull markets. It is telling us the crash we just experienced is the tip of the iceberg for the commencing Grand Supercycle degree wave {IV} Bear market. The downside price targets predicted by this next chart are breathtakingly low, an S&P 500 level below 1,000.
In conclusion, this stock market is set up for a Bear market for the ages, one that will include multiple plunges and crashes along the way.
Stocks oscillated up and down in a modest range Monday, February 28th, forming what looks like a large chunk of the middle wave b-down of an a-up, b-down, c-up corrective wave 2-up. Once this wave tops, stocks should start another crash, wave 3-down. Volume was strong the final day of February, with breadth narrowly negative. There was a small change in the McClellan Oscillator Monday, suggesting a large price move is likely over the coming days.
The recent stock market plunge came with several Hindenburg Omens on the clock simultaneously, warning of the serious fragility of stocks, and the likelihood of a crash. These proved prescient once again. There were H.O.'s on the clock for every single previous crash over the past 36 years.
The stock market currently sits on two simultaneous "official" Hindenburg Omen potential stock market crash signals. The H.O.'s are warning that the odds for a full-blown stock market crash are far higher than random at this time, one on the clock through May, the other through April. March into May could be particularly ugly.
We can expect a continuing wild ride for the Stock Market in 2022. There are going to be a total of 18 Phi Mate and significant Bradley Model turn dates throughout 2022. There will be 7 turns that both cycle methods identify together. Those will likely be major turns in the stock market. By comparison, there were only 8 total Phi Mate and Bradley Model turn dates during 2021, with only two turns identified by both at the same time. We will progressively feed these forward dates to you during 2022. Trend Turns typically occur +/- a few days from these dates.
Our intermediate term Secondary Trend Indicator generated a Sell signal November 26th. It worsened 6 points Monday (out of a possible 9 points), to negative - 45.
The Blue Chip three component key indicator generated a Neutral signal Thursday, February 24th, as the Purchasing Power Indicator triggered a new Buy. The NASDAQ 100 three component key indicator also went Neutral as its PPI also triggered a Buy. The small cap Russell 2000's Purchasing Power Indicator moved to a Buy signal Friday, February 25th.
Our Blue Chip key trend-finder indicators generated a Neutral signal February 24th, 2022 and remain there Monday, February 28th, 2022. The Purchasing Power Indicator component triggered a Buy signal Thursday, February 24th. The 14-day Stochastic Indicator generated a Buy on February 25th, 2022, and the 30-Day Stochastic Indicator generated a Sell on February 23rd, 2022. When these three indicators agree, it is a short-term (1 week to 3 months' time horizon) key trend-finder directional signal. When these three indicators are in conflict with one another, it is a Neutral (Sideways) key trend-finder indicator signal.
Demand Power was Flat at 494 Monday, while Supply Pressure Rose 2 to 537, telling us Monday's Blue Chip move was mild. This DP/SP Indicator generated a Sell Signal January 18th.
Today's Mining Stocks and Precious Metals Market Comments:
Gold rose 13.1 Monday, February 28th, with Silver rose 0.35 while Mining stocks fell 0.49.
Take a look at the charts on page 58. Gold and its ETF GLD have both completed sideways triangles from 2020, and Gold has broken out decisively above this triangle. Generally, the direction of prices headed into symmetrical triangles is the direction they leave, which in present case means up. Gold's initial upside price target from this pattern is 2,350, with GLD, its ETF, headed toward 215, both targets likely to be reached by the end of 2022 or early 2023. A steady rise should be evident for most of this year, with occasional corrective declines along the way higher.
Mining stocks are very close to an upside breakout from their two year declining trend-channel, shown in chart on page 64. If the HUI can break out of this channel, above 300, its next stop should be 380, with a further upside of 500.
Our HUI key trend-finder indicators triggered a new Buy signal February 7th. Miners and Metals are finally showing signs that they are tired of recent sideways action, as Gold has struggled to break up out of its "Handle" pattern. Once Gold breaks out above it, the Handle will be complete, and a clear path for much higher prices will be in place. The triangles noted above are supportive evidence that Gold could soon break out north of the handle.
Gold started a Bullish Cup and Handle pattern in 2011. The Cup portion completed a year ago, and since then Gold has been declining inside the handle portion of the pattern, which is the concluding piece. While the timing for a breakout is slow and frustrating for Gold bugs, one thing we can be assured of is once it breaks out of the Handle, a powerful rally will follow, one for the ages.
The HUI key trend-finder indicator triggered a Buy signal February 7th, 2022, as the HUI 30 Day Stochastic triggered a Buy signal February 7th, and the HUI Purchasing Power Indicator triggered a Buy on February 7th. When these two indicators agree, it is a directional signal, and when at odds with one another, it is a combination neutral signal. The HUI Demand Power / Supply Pressure Indicator triggered a Buy signal February 14th. On Monday, February 28th, Demand Power was flat at 415 while Supply Pressure rose 2 to 400, telling us Monday's decline was mild.
DJIA/SPY PPI fell 1 to negative -19.24, on a Buy
DJIA 30 Day Stochastic Fast 23.33 Slow 20.00 On a Sell
DJIA 14 Day Stochastic Fast 43.33 Slow 23.33 On a Buy
DJIA % Above 30 Day Average 23.33
DJIA % Above 10 Day Average 46.67
DJIA % Above 5 Day Average 70.00
Secondary Trend Indicator Fell 6 to Negative - 45, On a Sell
Demand Power Flat at 494, Supply Pressure Up 2 to 537 on a Sell
McClellan Oscillator fell to positive + 20.80
McClellan Osc Summation Index - 1433.08
DJIA 10 Day Advance/Decline Indicator -227.7 on a Sell
NYSE New Highs 68 New Lows 104
Today's Technology NDX Market Comments:
The NDX Short-term key Trend-finder Indicators moved to a Neutral signal Thursday, February 24th, 2022, and remain there February 28th, 2022. The NDX Purchasing Power Indicator generated a Buy on February 24th, 2022, the NDX 14 Day Stochastic triggered a Buy on February 25th, 2022, and the 30 Day Stochastic triggered a Sell signal on February 14th, 2022. When all three component indicators are in agreement on signals, it is a consensus directional signal. When they differ, it is a sideways signal.
The NDX Demand Power / Supply Pressure Indicator moved to a Neutral Signal Friday, February 25th, and remains there February 28th. On Monday, February 28th, Demand Power Rose 11 to 528, while Supply Pressure Fell 14 to 523, telling us Monday's rise was powerful.
The NDX 10 Day Average Advance/Decline Line Indicator triggered a Sell signal February 14th, and needs to rise above positive + 5.0 for a new Buy. It rose to negative -16.2 on Monday, February 28th.
NDX 100 Purchasing Power Indicator up 1 to 240.10 On a Buy
NDX 30 Day Stochastic Fast 30.77 Slow 23.33 On a Sell
NDX 14 Day Stochastic Fast 42.31 Slow 26.41 On a Buy
NDX 10 Day Advance/Decline Line Indicator -9.4 On a Sell
NDX Demand Power Fell 4 to 524, Supply Pressure Fell 6 to 517 Neutral
RUT PPI Flat at + 181.72, on a Buy
RUT 10 Day Advance/Decline Line Indicator - 139.00, On a Sell
McHugh's Market Forecasting and Trading Report and this Executive Summary |
