Good evening all.
A few interesting charts mapping the credit cycle, employment and corporate profit before diving into the latest wave counts.
The first shows private sector credit,
It is dropping negative again just as it had before the previous recessions.
This chart is as clear as it gets as to what to to expect in the coming years for the economy.
Next, corporate profits/GDP.
This measure of corporate profit has been on a long slide lower over the last few years,
just as the stocks which represent these profits have been on a tear higher over the same period.
That rally creates a stark divergence in the real P/E of the broad market.
This chart points the way for the valuations of these stocks.
Down to business.
DOW JONES INDUSTRIALS
todays decline was the first meaningful downside action for the last 18 days.
That rally had to give way to some sort of decline eventually.
But if I am right,
this decline should extend far further than most expect.
And possible kick off a large degree third wave down.
I have labelled the drop as waves 'i' 'ii' and 'iii' of (i) to the downside.
This decline should keep on going until a clear five waves down is complete.
A break of 23660 would be a real bonus to complete wave (i) down.
I want to see this selloff continue through the week.
Wave 'iii' of (i) down seems to be extending,
Lets see of wave 'iii' of (i) can carry the price back below the 24000 handle again.