October is Going to be a Bloodbath
Actualizado
Don’t Follow the Herd: A Rare Opportunity to Take Profits
Don't believe the media or the herd when they tell you to buy NVDA and hold the stock market. This is a rare opportunity to take profits and possibly speculate short on the market. The current Elliott Wave count implies a crash in October, and NVDA, which topped out nearly 100 days ago, WILL lead the way down. Let's summarize some of the key reasons why you should be bearish:
Elliott Wave Ending Diagonal: Signaling a Crash
Current Elliott Wave analysis shows we are in an ending diagonal pattern. This formation is known for indicating the final stages of a trend, often leading to sharp reversals or crashes. The completion of this pattern suggests that a major decline may be imminent, with little room left for further upside. THERE DOES NOT NEED TO BE A CATALYST. In fact, with a probabilistic Elliott Wave count, we can predict the so-called "catalyst" before it even occurs. An ending diagonal suggests bank failures may be near.
Yield Curve Uninversion: A Recession Signal Warren Buffett Watches Closely
The yield curve uninversion is one of the most reliable recession indicators, and it’s no secret that Warren Buffett keeps an eye on it. I’m not a big fan of Buffett, but historically, his timing is incredible, and yield curve uninversion is one of his main timing tools. Historically, this signal has a near-perfect track record in predicting recessions. We’ve now officially entered uninverted territory, and this alone is cause for concern.
FED Pivot: Following the Market Lower
Looking at past crises, particularly 2007-2008 and 1929-1932, the Federal Reserve’s pivot is often a sign of the central bank following the market lower. From 1929 to 1932, the federal funds rate dropped from 6% to 2.5%, and yet the Dow Jones Industrial Average (DJIA) fell by 89%. Similarly, in 2007-2008, the federal funds rate went from 4.76% to 0.22%, and stocks fell by 54% (DJIA). We are seeing a similar scenario unfold today, suggesting further downside risk ahead.
Extreme Sentiment: Higher Than 1929, 2007, and 2021
Sentiment is at extreme levels. Consumer predictions of higher equity prices in the next 12 months are at an all-time high, surpassing even the exuberance seen in 1929, 2007, and 2021. If you’re bullish, just remember—you’re moving with the herd.
Momentum Divergence Signals a Major Top
A 25-year-long momentum divergence is also flashing warning signs, agreeing with the view that a major market top is near.
Take Advantage of Peak Sentiment
If your goal as an investor is to buy low and sell high, statistics show us that investors are MOST bullish at the top and MOST bearish at the bottom. If you want to buy low and sell high, then you need to be selling into peak optimism and buying into peak pessimism. This is an opportunity to take profits, hedge, or if you are a experienced trader: speculate short.
Good luck,
Bardini Capital
Don't believe the media or the herd when they tell you to buy NVDA and hold the stock market. This is a rare opportunity to take profits and possibly speculate short on the market. The current Elliott Wave count implies a crash in October, and NVDA, which topped out nearly 100 days ago, WILL lead the way down. Let's summarize some of the key reasons why you should be bearish:
Elliott Wave Ending Diagonal: Signaling a Crash
Current Elliott Wave analysis shows we are in an ending diagonal pattern. This formation is known for indicating the final stages of a trend, often leading to sharp reversals or crashes. The completion of this pattern suggests that a major decline may be imminent, with little room left for further upside. THERE DOES NOT NEED TO BE A CATALYST. In fact, with a probabilistic Elliott Wave count, we can predict the so-called "catalyst" before it even occurs. An ending diagonal suggests bank failures may be near.
Yield Curve Uninversion: A Recession Signal Warren Buffett Watches Closely
The yield curve uninversion is one of the most reliable recession indicators, and it’s no secret that Warren Buffett keeps an eye on it. I’m not a big fan of Buffett, but historically, his timing is incredible, and yield curve uninversion is one of his main timing tools. Historically, this signal has a near-perfect track record in predicting recessions. We’ve now officially entered uninverted territory, and this alone is cause for concern.
FED Pivot: Following the Market Lower
Looking at past crises, particularly 2007-2008 and 1929-1932, the Federal Reserve’s pivot is often a sign of the central bank following the market lower. From 1929 to 1932, the federal funds rate dropped from 6% to 2.5%, and yet the Dow Jones Industrial Average (DJIA) fell by 89%. Similarly, in 2007-2008, the federal funds rate went from 4.76% to 0.22%, and stocks fell by 54% (DJIA). We are seeing a similar scenario unfold today, suggesting further downside risk ahead.
Extreme Sentiment: Higher Than 1929, 2007, and 2021
Sentiment is at extreme levels. Consumer predictions of higher equity prices in the next 12 months are at an all-time high, surpassing even the exuberance seen in 1929, 2007, and 2021. If you’re bullish, just remember—you’re moving with the herd.
Momentum Divergence Signals a Major Top
A 25-year-long momentum divergence is also flashing warning signs, agreeing with the view that a major market top is near.
Take Advantage of Peak Sentiment
If your goal as an investor is to buy low and sell high, statistics show us that investors are MOST bullish at the top and MOST bearish at the bottom. If you want to buy low and sell high, then you need to be selling into peak optimism and buying into peak pessimism. This is an opportunity to take profits, hedge, or if you are a experienced trader: speculate short.
Good luck,
Bardini Capital
Nota
Update on NVDA: Potential Final Rally Before a Pullback
NVDA has broken out from a 4th wave triangle, invalidating my previous main count. It now looks like NVDA is poised for one last significant run toward all-time highs. Immediately after, we should expect a sharp pullback into wave E of the 4th wave triangle, which could signal the conclusion of this bull market.
It’s uncertain whether the Dow Jones Industrial Average (DJI) will confirm with a new high, so for now, I’d advise staying cautious. This remains a prime opportunity to take profits, especially given the historically high equity prices we’re seeing.
Nota
UPDATE: DJI Likely Topped After Today’s Price Action
Based on today’s market movement, it appears that the Dow Jones Industrial Average (DJI) may have reached its top.
Today’s price action heavily suggests that the bear market has just begun and is in its very early stages. If this marks the end of the ending diagonal, we should brace for a swift move lower that catches everyone off guard. A liquidity event could trigger a sell-off across all asset classes. Once margin calls begin, there will be little to stop the market from ripping lower.
Small traders, or “dumb money,” are currently the most heavily invested in American history—and they are about to get wiped out.
UPDATE: NVDA
NVDA has completed its 4th wave triangle and thrusted higher as my alternative count predicted, coming just shy of the wave 3 high (though it did clear it on a closing basis). It’s uncertain whether NVDA will continue higher from here, but one thing is certain: there has never been a better time to take profits and speculate short on the market than today.
In Conclusion,
October remains on track to close in the red, as originally forecasted, with a strong likelihood of a market crash unfolding before the month ends.
Operación activa
Recommendation for Experienced Traders
For experienced traders, I recommend taking a short position on the Dow, with a stop set at the high or just above the wave 1-3 trendline, around 44,200.
Operación cerrada manualmente
I was stopped on the DJI position and caught some upside on NVDA. October ended weak but not a crash. Overall the count changed from a diagonal to an impulse see recent idea.
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