SPY Weekly Wrap: Bitcoin Collapse By: Carl Swenlin | December 22, 2017
Two weeks ago I led with a chart of the Bitcoin Index. It was in a dangerous parabolic advance, and I said: "Yes, price could go higher, but it is also at a point where the parabolic could collapse, and the potential downside is back down to the support of the basing pattern between 400 and 1000." Well, it did go higher by about +15%, and this week it collapsed, down almost -40% on a closing basis. It is still far from the potential downside, but the danger has been clearly demonstrated.
The Bitcoin ETF chart shows the intraday swings, and it emphasizes how quickly a parabolic can crash.
The DecisionPoint Weekly Wrap presents an end-of-week assessment of the trend and condition of the stock market (S&P 500), the U.S. Dollar, Gold, Crude Oil, and Bonds.
STOCKS
IT Trend Model: BUY as of 11/15/2016
LT Trend Model: BUY as of 4/1/2016
Daily Chart: On the six-month chart we see that last week price finished inside a tight rising wedge formation, which we normally expect to resolve downward. But this week, the short odds paid off as price popped upward on Monday. Now another wedge has formed, and as usual we should expect it to break down.
Let's zoom out to one year. Here we can see that price has advanced on ever-steepening trend lines. This is a parabolic advance (though not as extreme as we saw on the Bitcoin chart), and it calls for some corrective action.
Weekly Chart: For the fourth consecutive week price is still contained by the top of the two-year rising trend channel.
Short-Term Market Indicators: The negative divergences persist.
Intermediate-Term Market Indicators: Negative divergences persist in this time frame also, and note that the ITBM has dropped below the signal line.
Conclusion: I keep looking for some corrective action, but the market keeps giving me higher prices. Nevertheless, I think we're headed for an important top soon -- not necessarily the top, but something that will stand out when compared with the tiny speed bumps we have experienced this year. Next week is a placeholder between Christmas and New Year, and market action will probably be unremarkable. Maybe things will get more interesting when we come back to work in 2018. Have a great Christmas!
* * *
• DiscoverGold
Click on "In reply to", for Authors past commentaries
News 
Market Data 
Discover 
