Stocks need to go parabolic today or it’s game over for the bulls.
While the financial press continues to buy into the narrative that we’re in some kind of economic utopia, the reality is that the market senses a truly MASSIVE move is about to come.
The below S&P 500 formation is called a 'Rising Wedge' formation. The truth is that stocks can break out of these formations either way. But if the breakout is to occur to the upside, there needs to be follow-through. A great example of this occurred in February when we had an upside breakout, but there was no follow-through so stocks fell back into the formation again.
Stocks broke down hard from this formation last week, but the bulls were able to reclaim it (barely) on Tuesay.
So now the onus is on the bulls. Either they push this thing straight up to new highs on heavy volume, or it’s game over.
Will they do it? I don’t believe so. The ramp of the last few days has been on very little volume. The global economy is rolling over. And the Fed has all but promised that it will raise rates again in June (yes, the Fed is raising rates into economic weakness).
A final key point: the longer stocks remain in this formation, the more violent the final breakout will be.
We’ve now been in this formation for nearly an entire year.
Downside Target?
A Crash is coming and it’s going to be bad.
Smart investors will use it to make literal fortunes.