AI
Wednesday, April 06, 2016 2:30:06 PM
More Downside to Come?
http://www.pretzelcharts.com/
"Monday and Tuesday made for interesting sessions, inasmuch as we finally had a truly clean, complete-looking five wave rally into Friday's close, and Monday and Tuesday saw the rally stall and reverse. A week ago, I wrote that we were finally into price territory where I was willing to commit to the assumption that "the top is closer than the bottom," and I'm sticking to that call until such time as the market suggests otherwise.
Incidentally, a week prior to that (on March 23), I warned that the rally was likely running out of steam and that the market was entering chop zone territory. SPX had closed at 2049.80 when I wrote that warning... and here we are two full weeks later with price only having moved a net of -4 points (yesterday closed at 2045.17), so I believe we can put that call in the "plus column."
So what next?
Well, combined with the warning indicators I've discussed over the past couple weeks, we do finally have a potentially-complete five-wave rally structure (as noted Monday) -- and, perhaps more importantly, we have a downward reversal after the apparent fifth wave completed. While we don't yet have a large impulsive decline, the wave structure does suggest that the downward wave is incomplete, so a larger decline wave could yet materialize.
Overall, we have mounting evidence that the trend may finally be turning back toward the bears' favor.
Let's take a look at the charts, starting with SPX. Presuming we're dealing with at least an ABC down, then 2000-2010 is reasonable. This next statement is a little ahead of the near-term structure (which hasn't confirmed a larger impulsive decline), but if we just saw the end of the preferred intermediate count's C-wave, then the next target is south of 1810."
Next is INDU, which, unlike SPX, has broken both its uptrend lines:
"Finally, NYA is the one potential fly in the ointment for bears, in that it did not provide a clear top. The top in NYA is muddy because it could be a b-wave -- but if it is, then it is either building an ending diagonal for the C-wave (we'd know this because it would bottom directly), or gearing up for a significant C-wave decline. I'm more inclined to think it's the latter IF this is a c-wave decline (as opposed to the start of a new impulsive decline).
The short version of all that: If NYA fails to bottom fairly directly, then even the bullish count suggests a decent decline before it's all said and done."
"In conclusion, while we don't yet have confirmation of a larger turn, the evidence continues mounting in favor of the bear case. Barring an almost-immediate reversal (to complete a bullish diagonal in NYA), we're likely to head lower over the coming sessions. Trade safe."
http://www.pretzelcharts.com/
"Monday and Tuesday made for interesting sessions, inasmuch as we finally had a truly clean, complete-looking five wave rally into Friday's close, and Monday and Tuesday saw the rally stall and reverse. A week ago, I wrote that we were finally into price territory where I was willing to commit to the assumption that "the top is closer than the bottom," and I'm sticking to that call until such time as the market suggests otherwise.
Incidentally, a week prior to that (on March 23), I warned that the rally was likely running out of steam and that the market was entering chop zone territory. SPX had closed at 2049.80 when I wrote that warning... and here we are two full weeks later with price only having moved a net of -4 points (yesterday closed at 2045.17), so I believe we can put that call in the "plus column."
So what next?
Well, combined with the warning indicators I've discussed over the past couple weeks, we do finally have a potentially-complete five-wave rally structure (as noted Monday) -- and, perhaps more importantly, we have a downward reversal after the apparent fifth wave completed. While we don't yet have a large impulsive decline, the wave structure does suggest that the downward wave is incomplete, so a larger decline wave could yet materialize.
Overall, we have mounting evidence that the trend may finally be turning back toward the bears' favor.
Let's take a look at the charts, starting with SPX. Presuming we're dealing with at least an ABC down, then 2000-2010 is reasonable. This next statement is a little ahead of the near-term structure (which hasn't confirmed a larger impulsive decline), but if we just saw the end of the preferred intermediate count's C-wave, then the next target is south of 1810."
Next is INDU, which, unlike SPX, has broken both its uptrend lines:
"Finally, NYA is the one potential fly in the ointment for bears, in that it did not provide a clear top. The top in NYA is muddy because it could be a b-wave -- but if it is, then it is either building an ending diagonal for the C-wave (we'd know this because it would bottom directly), or gearing up for a significant C-wave decline. I'm more inclined to think it's the latter IF this is a c-wave decline (as opposed to the start of a new impulsive decline).
The short version of all that: If NYA fails to bottom fairly directly, then even the bullish count suggests a decent decline before it's all said and done."
"In conclusion, while we don't yet have confirmation of a larger turn, the evidence continues mounting in favor of the bear case. Barring an almost-immediate reversal (to complete a bullish diagonal in NYA), we're likely to head lower over the coming sessions. Trade safe."
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
