Is the Bull Market Over — Part 2? More Words on Cycles: Sunday 31 October 2021
Quick end of the month performance update…September sucked for the regime-based asset-allocation algo, but October saw a revival…allocation to metals has been a drag…
Currently the algo is invested in Stocks (“Buy the dip”), Metals (“Buy the dip”), and Bonds (“Mind the Squeeze”)
Now, after going on the offensive in early-October, using 4290/4350 as an accumulation zone in the SPX (as described here https://kudakwashe-chinhara.medium.com/is-the-bull-market-over-another-short-word-on-cycles-sunday-10-october-2021-b35689050d86) the Elliott waver in me is nervous (when is he ever not?).
Whence the nerves?
1. In Elliott parlance, a clean 5-wave sequence from early-October is near completion.
2. Thrown into the mix is the fact that the market is heading into levels marked out by the Turning Points Analysis as strong resistance (4625/4690/4830/4875/4940).
3. Mildly supportive short-term seasonal factors appear to be currently in play but will wane around next weekend (5–9 November).
The medium-term seasonal factors support strength into year end, nevertheless, a bout of weakness prior to US Thanksgiving may be on the cards to set up a leg higher into the new year.
So what am I doing? I am purchasing a risk-reversal to protect my core longs on stocks…something to tide me over during a potential pull-back mid-November.