Transcription
Hey guys, Allesia. Hope you're well.
In this video, we're going to take a look at this chart you're seeing here of the stock market. And there are some analysts who are saying that this particular chart could spell disaster for the stock market. In fact, according to some respected analysts, this particular chart could be warning us that the stock market could potentially move into a downtrend or a bare market. But why do they think this? And are they right? We'll discuss this in this video. All right, guys. Join me.
Hey guys, welcome back. So, in a few minutes, I want to discuss the US chart of the stock market, which has some important meanings for us, especially for the next several years. Now, let me just quickly mention my good friend and trader Charlie Burton and I are doing an online educational course on trading and technical analysis. The link to get the early bird discount on the course is now available for you here. So, just go to the link is in the description as well, and I'll tell you more about it at the end of the video.
Let me just tell you briefly where I am. I'm in a region of England, a place called Penzance, otherwise also known as Lanzend. I've never been to Penzance, but I'm sure you've heard of Cornwall. Anyway guys, let's take a stroll here briefly and let me just explain to you the significance and meaning of this chart, the stock market, and also the NASDAQ, this particular chart you're seeing here as well.
All right, guys. There have been some analysts, some very respected analysts who've been saying that this particular chart of the stock market, take a look over here, uh this trend line you're seeing here, this rising trend line. But again, you might be wondering, okay, well, so what? Well, some analysts are saying, well, if you connect the highs before the crash that occurred, that high from 2007. So, if you drew a trend line by connecting those two tops on this logarithmic chart from the highs just before the 2007-2008 crash and then by connecting that to the highs we made in the year 2021-2022, you will see where that trend line meets us. Essentially, that trend line meets us in the year 2025. So you can see that the stock market as a matter of fact has come now to that very important critical trend line that actually if you go on a chart of the NASDAQ you will see uh also a trend line resistance on this chart you're seeing here of the NASDAQ which meets us just about the region where the market came to in the year 2025. So in other words we have at least two different charts which have a similar rising trend line with resistance meeting us in the year 2025.
Now you're probably wondering okay well you've got these trend lines on these different charts. Well, so what what has it got to do with now? Well, as I'm sure you know in technical analysis, trend line resistances, in other words, when the market rallies up to a trend line, an important trend line, uh like on this chart you're seeing here, especially on higher time frames, uh as you can see, we're actually using here a monthly chart. So, it's quite a long time frame we're using here. So quite simply in technical analysis when the market rallies up to a key trend line resistance typically gets rejected especially after it drops and breaks support that could be a significant sign of danger that the market could be getting ready for a move into a downtrend or indeed some kind of a bare market. And remember guys um we're using here a higher time frame. We're using the monthly chart. Why is this important? Well, there are some respectable analysts out there who are saying, "Look, uh, because the stock market is now rallying or has rallied in the year 2025 to these key resistance trend lines that we see there on these charts and because these are higher time frame charts which carry even more importance. By the way, you'll notice that the stock market rallied up to that trend line resistance and as a matter of fact, it's getting rejected uh because of the recent pullback that occurred. The market has now got rejected and is now dropping. In other words, the market has deflected from those trend lines. The price action went slightly above those trend lines and as you can see here is now pulling back getting rejected from those trend lines as a result of the most recent pullback. But there are some respectable analysts out there who are saying look because resistance trend lines especially on higher time frames because they act as resistance for price in other words the stock markets and because price is now rallying or has rallied to this key trend line resistance. This can act as an important level or ceiling for the stock market. Again ceiling in quotation marks because nothing can ever be a ceiling. Well, this indicates a key resistance that could potentially result in the stock market falling into a downtrend or a bare market. But again, there are some analysts who are saying, look, based on probabilities, there is now, again, according to them, a high probability that the stock market is now getting rejected from these trend line resistance levels and that potentially the stock market could likely fall into a bare market and a downtrend. In other words, these resistance trend lines could spell disaster for the stock market.
Now, there are some analysts who are already making up their minds and saying, "Look, this is it. The market has topped." So, for them, again, this is not my opinion, but they're saying, "Look, the stock market has topped already. It's getting rejected from those trend line resistance levels." And according to these analysts, they're saying that the stock market has already topped and we're falling into a multi-year, probably a long-term bare market and downtrend.
So the question you're probably wondering is okay are they right? Do I agree with them? So let me just discuss that. I don't think it's enough. I think the stock market has to perhaps show to us uh in other words prove to us that it's falling into a bare market by doing some further action or giving us some further information. So personally for me I'm not yet convinced that just because the stock markets have rallied up to these key trend line resistance levels and now getting rejected from those levels that that's sufficient to say that now we're falling into a long-term bare market. Of course, it's possible these analysts who quite bearish, they might be right. But I don't know about you, but I personally would need further information from the stock market to prove to us or at least show to us with a high probability that we're falling into a downtrend, a long-term downtrend or a bare market. And I don't think we're there yet.
What I would require the stock market to do, what I would need to see before I can become convinced that the stock market is falling into a downtrend or a bare market. And I'm going to say this because there are some people out there who are probably watching this video and they're saying, "Oh, Allesio is bearish. Allesio is a perma bear or Allesio is always negative on the stock market." That is simply not true, guys. If you go and watch my previous videos, for example, back in April, uh you know, I was bullish on the stock market when the stock market crashed and dropped. I mentioned at a time in April that we reached capitulation. So, I was very bullish on the stock market at the time. Now, it is true. I was looking for a pullback in the stock market uh sometime in May or June. Didn't happen. You know, we're dealing with probabilities here. We can't get things right every single time. I try my best to remain objective as possible on the charts of the stock market as with any other charts as well.
So, my point is simply this. In order for the stock market to convince us and actually persuade us with a high degree of probability that we're falling into some kind of a bare market or a downtrend as some of these analysts are claiming. What I would require to see first of all for the stock market to break support, so a key support level. By the way, I've discussed a key support level in the member videos already. So, go ahead and watch that. Let me just say that I go into much more detail on the stock markets, gold and bitcoin in the member videos. So in a nutshell, if the stock market, which is by the way getting rejected from these important trend line resistance levels. So if the stock market were now to drop and break key support, okay, then that would indicate with a high degree of probability that we're likely falling into a downtrend. That has not happened as I'm making this video. Secondly, the drop that occurs, the drop that we see in the next several weeks and months must be impulsive. Okay, what does that mean? It simply means that it must be composed of five waves. So, five waves that are not overlapping. Okay, if we see a non-overlapping five-wave decline, in other words, an impulsive drop in the stock market, then that would increase the likelihood that we're falling into a bare market. And by the way, in case you're wondering why does the drop have to be impulsive, this has to do with Elliot wave theory, which I think is very important. And that simply means that according to Elliot wave theory, if it's a five-wave decline, that increases the probability that we're falling into a downtrend. Because trends are typically composed of impulsive structures.
All right, guys. Quite simply, in a nutshell, those are my two criteria that I need to see before I can be persuaded that the stock market is going to fall into a downtrend or a long-term bare market. So, I'm not convinced uh like these analysts out there that the stock market's already topped and we're going to fall into a downtrend. Of course, they may be right. It's possible. But what I would like to see is a high probability that the stock market is going to give us more information before we can make up our minds that we're falling into some kind of a downtrend or a bare market. And again, at the moment here, guys, I do not have that information to make a decision on that point. I think it's too soon to call at this point in time. Of course, if the stock market did something which was very negative by breaking support in an impulsive fashion, then yeah, I would have to change my mind and then I'll become bearish. So, we might see a bit further decline here in the stock market. Potentially, we might see an extension of this drop. Perhaps maybe by a few percentages.
All right, guys. Before I finish this video, let me just quickly mention that don't forget to take advantage of the early bird discount on the online educational course that I'm doing with my good friend and trader Charlie Burton. Now, Charlie Burton has had 28 years of experience as a professional trader, and he's going to bring that experience to this particular course that we're doing together. And for the first time, we're doing an online educational course on technical analysis and trading. So, we're going to be covering subjects such as what exactly is working in technical analysis today and going into 2026, how to analyze the charts from the point of view of time analysis, multiple time frames, powerful momentum moves, and so on and so on. By the way, the full details are on that web page on that link you see right there. That's protradingworkshop. To get the early bird discount, you need to act now because it's only for a limited time. So, go to that link. It's in the description. And we look forward to seeing you guys at the online course.
All right, guys. Thank you very much indeed for watching this video. I look forward to seeing you in the next video update. Cheers. Bye now.