Friday December 20th – How Bad Will It Get?

/in /by

It seems that the Feds discussion of possibly only 1 rate cut in 2025 may have ‘peaked’ the markets bull run for now and started the process of a drop into an ICL. I had mentioned an ICL dip in Jan or Feb in past reports, so this is likely the start of that drop. I will discuss that below, but also a bit more in the weekend report.

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After the Fed Day crash down, THE SPX could not get back above the 50sma.

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YESTERDAY I SHOWED OUR CYCLE COUNT: I said…

We were on day 22 of the 3rd daily cycle on Wednesday, and that is timing for a half cycle low, but this could be more than that.  This was not a normal dip, it was a crash.

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NASDAQ gapped up and sold off too. This is day 23 or a possible 35-40 day daily cycle. It MIGHT be a deeper half cycle dip followed by a bounce next week into Christmas.

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The SOXX actually continued lower after being rejected at the 50 & 200sma.

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CAN THE MARKETS BOUNCE OUT OF THIS DROP?  Yes, we could get a decent bounce next week into Christmas, but that may just lead to choppiness over time, since we are moving later into our 3rd daily cycle. It does allow time to add a ‘short’ as a hedge, if you are holding long positions. It looks like this daily cycle has probably already ‘peaked’ for the General Markets and there should still be a good amount of time left for it to chop around and down. The Fed changed their stance from 4 possible rate cuts in 2025 to only 1 or maybe 2, and that really slowed down the Markets bullish drive. This is the 3rd daily cycle so a 4th daily cycle could give us the sell off into the ICL that I discussed for Late January or even February if we have a 5th daily cycle. At that time something will trigger an ICL and a rally and that will present a good buying opportunity too.

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THE USD did not roll over with the quarter point rate cut, possibly strengthened by the ‘only 1 rate cut may be needed in 2025’ discussion.

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GOLD bounced and dropped again, but it didn’t put in a new low at this point. Gold could possibly drop to the 200sma, but it is set up as though we had an ICL drop onto the 50sma and this is a R.T. first daily cycle.

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SILVER had 2 choppy daily cycles higher and then the 3rd one made a new peak on day 10 and then rolled over into a deeper drop. Silver bounced too, but it did break down to a new low and could make a move something like I have drawn here in an a-b-c pattern. Some might ask: “Isn’t this R.T. too?”  It is on stockcharts, but take a look at spot Silver…

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USING SPOT SILVER we saw a lower low after the one that stockcharts shows as the low (day 36 vs day 26), so this would give us  a longer 3rd daily cycle with 36 days, then a 4th daily cycle that peaked on day 10 of 16 so far, so we’ll see if this drops further and becomes L.T. THAT SAID, I usually just go by Gold, because Silver and the Miners often stretch or exaggerate the moves.

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GDX broke down below the 200sma after back-testing the 50sma and channel. There is divergence developing with the RSI, MACD vs Price at new lows, so we may be close to putting in a swing low soon.

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I just wanted to show when The GDX had dcls:

1. The first dcl was at day 23

2. The second daily cycle was also at day 23

3. The third dcl was at day 26

4. We are currently at day 24, so a DCL can form at any day, but GDX can drop further.

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At this point in time, it does appear that the Fed Decision and discussion has shot a tranquilizer dart into our Bulls. The markets usually become choppy at this point, so we could see a weaker bounce next week that doesn’t take us to new highs, as shown here on this chart, or the markets also could just outright sell off in a steadier manner, now that the Fed discussed only 1 or maybe 2 rate cuts in 2025.

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A small bounce next week into Christmas or the year end may also allow some to sell stocks or add a ‘short’ as a hedge.  On this chart, take a look at the last ICL. We could do that next.  ICLs come roughly every 6 months and that one was in Late July – early August.  We are due.

It will take time to get to the new lows in the General Markets, but as always, the ICL is the BEST buying opportunity for steady gains in a buy & hold manner. We may also be able to short the next bounce. Enjoy your Friday trading day or you could even take the day off and start the weekend early. This week has been Fed smacked.

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~ALEX

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BITCOIN was really liking the rate cut environment too, but it doesn’t seem to be doing well after the Wednesday Fed Mtg either. The RSI and MACD have already weakened considerably over the past 2 days. Since we are rather early in a 60 day period of time, this could have 10-15 more days of uncertainty – weakness – choppiness.