Friday, November 13, 2015 12:43:06 PM
Market Still in No Man's Land
http://www.pretzelcharts.com/
"On November 2, I warned that it may be time for a correction, but that turned out to be just a hair early. Nevertheless, given the unusual nature of this wave -- and the fact that we expected a trade-able bottom back in September (at SPX 1865-80), and the near-term waves kept us leaning higher until the end of October -- it wasn't bad timing.
2116 was an incredibly interesting price point for the rally to stall at, because it keeps the most bearish options on the table. The bull option is obvious: Bulls want this decline to be a fourth wave that bottoms reasonably directly and heads to new all-time highs. That's entirely possible, and I wouldn't rule it out. But I personally wouldn't bet the farm on it, either -- at least not until we start seeing some impulsive rallies."
"On INDU, I began showing the options for a large flat back on October 16, and the chart below shows that the minimum requirements for that pattern (particularly: a 90% retrace of the decline) have since been met:"
"Finally, NYA shows the potential that the recent rally may have been an ending diagonal c-wave (at least, in this index). If the pattern shown below whipsaws significantly, then bears might want to be cautious:"
"In conclusion, this has the potential to turn into a nasty and deep decline, so it's not advisable to front-run this wave. I'm somewhat tempted to begin favoring the intermediate bear counts, but I'll give the bulls a little more time, to see if they can turn this into an expanded flat (c) wave, since this is still something of a no man's land. Basically, it seems advisable for both sides to remain well aware of the worst case scenarios here, at least until the market dictates otherwise. Trade safe."
http://www.pretzelcharts.com/
"On November 2, I warned that it may be time for a correction, but that turned out to be just a hair early. Nevertheless, given the unusual nature of this wave -- and the fact that we expected a trade-able bottom back in September (at SPX 1865-80), and the near-term waves kept us leaning higher until the end of October -- it wasn't bad timing.
2116 was an incredibly interesting price point for the rally to stall at, because it keeps the most bearish options on the table. The bull option is obvious: Bulls want this decline to be a fourth wave that bottoms reasonably directly and heads to new all-time highs. That's entirely possible, and I wouldn't rule it out. But I personally wouldn't bet the farm on it, either -- at least not until we start seeing some impulsive rallies."
"On INDU, I began showing the options for a large flat back on October 16, and the chart below shows that the minimum requirements for that pattern (particularly: a 90% retrace of the decline) have since been met:"
"Finally, NYA shows the potential that the recent rally may have been an ending diagonal c-wave (at least, in this index). If the pattern shown below whipsaws significantly, then bears might want to be cautious:"
"In conclusion, this has the potential to turn into a nasty and deep decline, so it's not advisable to front-run this wave. I'm somewhat tempted to begin favoring the intermediate bear counts, but I'll give the bulls a little more time, to see if they can turn this into an expanded flat (c) wave, since this is still something of a no man's land. Basically, it seems advisable for both sides to remain well aware of the worst case scenarios here, at least until the market dictates otherwise. Trade safe."
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