The Big Picture
Many are now calling for the start of a new secular bull market. The consensus went from being excessively bearish in early 2023 to now being excessively bullish. Some of the most prominent bearish voices are even flipping into a much rosier outlook for the coming years.
Though we are open to this scenario, and even game planning for what that would look like, our broad market technical analysis is suggesting caution, for now. One of the primary tools I use to analyze the broad market is Elliott Wave. It is excellent at providing context as well as price levels that will confirm a thesis or negate it. The foundation states that all markets move in 5 waves up in the primary direction, followed by a 3 wave retrace, which then repeats.
With that in mind, the below chart shows the S&P 500 starting from the March low in 2009.
The pattern this secular bull market has taken is a mature 5 wave pattern that has extended into January 2022. The 3rd wave topped where it was supposed to, and the 5th wave into 2022 even extended. From this analysis, the problem with the thesis that we are starting a new secular bull market is twofold:
1) We have not had a sufficient 3 wave retrace of the secular bull market that started in 2009. This would take years to develop and likely take us back to the COVID lows. Though we have seen some sharp and complex drops within this large 5 wave uptrend, we have yet to see one sufficient in both time and price to constitute a legitimate retrace of the secular bull market.
2) This means that is we are starting a new cycle within the secular bull market, we have to be extending the 5th wave that started off the COVID low. The problem with this thesis is that we are already very extended, and 2022 was simply too deep to suggest that we are going to extend too much higher.
This means that the secular bull market that started in March of 2009 likely terminated in January of 2022, or is close to terminating sometime in 2024. We have thus started or are close to starting a secular bear market, which would be the counter move to the 12 year secular bull market that started in 2009.
Where we will pivot, and instead plan for the continuation of this cyclical bull market is.
2024 Price Analysis
If we zoom in on the structure off the 2022 top, I’m counting 2023 as an extended B wave within a larger bear market. The only question is how much longer can this stretched pattern extend into 2024?
There are two interpretations on how I believe the price action can best be explained:
Green – The October 2022 low was the end of the A wave down, and start of the B wave up. The structure of this B wave is in the form of a very complex pattern that is rare to see on such a large scale. If this is playing out, we should see a top in January, followed by a deep retrace into February, which will be followed by one final swing higher into March/April. This will mark a major top.
Red – This count is the same as the above green count. The only difference is that we took a more direct path to the larger top, which would likely end sometime in late January.
Positions Report of Nvidia, Bitcoin, and Microsoft
Nvidia (NVDA)
My long-term target for NVDA’s bullish path has been $575-$600 for many months. I’m still holding to this, and my red count has us in the final 5th wave push higher into this target.
The other alternative, which fits better with the current structure, is that we are actually in a 2nd wave retrace, with final targets around $640. This is my green count, and though it fits better with the move off the November low, the $640 target does not fit with the proportions of the larger 5 wave pattern that started in 2022.
How we will know which one is in play will require two things: 1) any remaining weakness must hold $420. Below $420 and both green and red are a risk of not playing out. Below $420 and the odds start favoring my alternative blue count, which has last August as a major top. 2) Then, we will need to see a breakout above $575 – $600 to confirm the green count is in play.
Bitcoin (BTCUSD)
Until Bitcoin truly goes vertical, there are many ways in which this new bull cycle can be counted. We are likely in one of the final dips worth buying, which is targeting $38,000 – $35,000. However, if we are in the start of a sudden 3rd wave, keep in mind that the nature of 3rd waves is marked with shallow corrections that leave investors behind. So, we will likely start adding in the $40,000 region, and layer in as we go lower, or if we bottom and breakout higher. Also, in order for this scenario to manifest, we have to hold $30,000 – $28,000.
Microsoft (MSFT)
MSFT has a very clean wave count, and is currently trading at a risky spot. If the 2020 breakout was the halfway point for the 5 wave move off the 2009 low, then the $378 price range is the target for the final swing, which is exactly where price is struggling to break above.
What is concerning is that we have completed a full 5 wave move off the 2009 low, and hit our long term target. There is room for an extension to the $415 region, but the risk is elevated considering we are talking about the final 5th wave within a larger 5th
What this means is that the 2023 uptrend was the final 5th wave, which is still playing out. If we zoom in on 2023, MSFT appears to have room for another swing higher. If we are in the minor 4th wave, the minor 5th wave should take us into the $400-$415 region before terminating.
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