Now its Easter Inflation Rally Mode

2022年4月11日

INTERMEDIATE WAVE 1
It is likely we have ended this wave although technically the index could still go lower for one more day. This analysis is based on the assumption we have ended wave 1 on April 11 as originally forecasted.

INTERMEDIATE WAVE 2
With wave 1 lasting only 9 days, I am expecting wave 2 to last 3-4. Most of the models agree at 4 days. Day 4 would be the Monday after Easter. My gut is leaning toward 3 days as there is a market holiday on Friday. It is most likely there will be lighter trading or jubilation at the start of earnings season that is dashed quickly (next week) by a rockier short-term inflation drag on future outlooks. Plus 3 days away from the markets can lead to longer uncertainty (Russia, Middle Eastern conflicts, oil, etc.). We do not have many price targets, but should see a decent rally for this holiday shortened week. It is likely the inflation numbers are swallowed better than expected starting tomorrow. We are looking at a 2.5% rally with potential tops above 4500. Historically wave 2’s ending in 32C2 retrace 58-70% (4522.84-4570.16) of wave 1’s movement. History says this is possible, but my more conservative target is 38-50% (4495-4522). This movement will also contain an ABC upward pattern, where wave B is downward. All price targets are:

4491.75 which is 36.42% retracement of Intermediate Wave 1 as ended on April 11
4496.95 ----------- 38.69%
4520.05 ----------- 48.78%
4525.52 ----------- 51.17%
4541.43 ----------- 58.12%
4551.46 ----------- 62.50%
4570.16 ----------- 70.67%
4585.15 ----------- 77.22%
4601.47 ----------- 84.35%
4614.27 ----------- 89.94%

INTERMEDIATE WAVE 3
Intermediate wave 3 is where we am forecasting the most significant downward movement still. This could be Russia related, but it will also occur during the bulk of earnings season. Our guess is the economic outlook, inflation, interest rates, transportation costs, along with the Fed’s pace and rate of rate increases will take center stage during earning calls. This outlook may look bleak in the near-term, but we continue to anticipate the market to find its bottom before the end of the summer and as early as mid-May. We will have Intermediate wave 3 forecasts once we appear to finish wave 2 (with the first projections this weekend).

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