Clorox chart ready to begin the big, painful deflationary decline.

Clorox makes bleach and cleaning products.   The demand increases with population (or with expanded markets).  It does not logically have an exponential component to it.  Yet look at that 3rd wave.  You'd think it was an Internet start up or something with that chart.  Well, what gets inflated up in the credit Ponzi pump of the century will deflate just as quickly.  I count 5 waves up.  Then I count 5 small waves down into blue 1.  Then It seems pretty clear that an a-b-c has transpired so far this year.

Zooming in on just blue 2 shows that we are within a week of topping and in fact it might already have done so.  That 5th of 5th of 5th is always difficult.  The reason I think it has likely already peaked is that the blue rectangles connected by parallel lines show you that 1 and 5 are very close to the same length when 3 is the extended wave.  There is generally only 1 extended wave in an impulse and 3 was it.

Since red 5/blue 2 finished we have seen only 3 waves down so far.  Friday we saw a bounce off that 3rd wave and it looks to be a diagonal so I would expect the next move to be down. If it hits a lower low than the 3rd wave then the new bear market is confirmed.  It could always go up and form the owl over the next trading week as well either in 3 or 5 waves.  But I don't think it will reach a higher high.

It is always also possible that we are in the middle of the creation of a 4th wave which will just bounce up and down in this range into a narrowing point until the summer is over before one last short-killing thrust before really turning down.  But when I see shares like Microsoft and Intel going almost straight up I really don't think they have a lot of time before they have to begin shaking out all those new weak hands who obviously have leveraged up on margin to participate a this point.


"We will know a lot more next week" is getting very old to me as well but keep in mind that this is what always happens near the end: the markets wear everyone out.  They wore out many famous shorts and naysayers over the past 5 years including Hugh Hendry (who really should know better) and more recently Dennis Gartman.  If you are getting worn out, just take a week on the sidelines and let the markets wear themselves out.  You will know when the panic begins. Anything below 16950 or so will indicate a high likelihood of imminent breakdown.