Abet Chichi2

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For those who follow Elliott Wave analysis:

If you want to trade this market, you have to listen to what it’s saying

* September 12, 2016

For months, we have been grinding sideways without being able to take out our resistance region noted on the charts. When the market opened a few points below our 2177 upper support level on the S&P 500 SPX, +0.57% on Friday, it told us right away that the downside is likely starting. Our wave ii of (3) was likely underway.

In our update last weekend (Saturday, Sept. 3), I concluded with the following summary:

“As long as we remain below the resistance noted on the chart, I will still give the market the opportunity to provide us with the lower levels we want to see for the ideal pullback. But I am not sure the market is going to have more than the upcoming week to finally give us the bigger pullback we have been eagerly awaiting.”

Moreover, for those of you who have been following our analysts who have developed their own proprietary indicators, "The Scary Guy" was looking down with his proprietary pull/call-ratio-based analysis, Dr. Cari Bourette (from MarketMood.net) was calling for an imminent crash-like event for Friday, and Victor's proprietary fractal algorithm was flashing a weekly sell signal.

Since the market was basically out of room based upon our wave analysis, it had to make a decision, and it finally broke down. As I have also been saying for some time, our first target for a break down was in the 2110SPX region. As of the close on Friday, we have almost reached that level already.

What comes next is probably a bottoming in the 2110SPX region (with the potential that we may spike just below that) in what will either be an a-wave of a larger degree wave ii, or, it can represent all of the wave ii. The only way to really tell is by the nature of the next rally off the low we likely see in the coming week. My primary pattern has this as only the a-wave of a larger wave ii, with lower levels to be seen later this month. But I am going to maintain an open mind based upon how the rally takes shape.

As a word of caution to anyone who automatically assumes that the next rally must be corrective and much lower levels are "certain," please look back to earlier this year. We had a very similar pattern play out from March through June, and we initially expected that the spike down in June would complete just the a-wave of wave (2). Yet, it completed all of wave (2). So, keep in mind this may happen again.

While my expectation is to see a standard wave ii take us down in a larger a-b-c structure as shown on the 60-minute chart linked below, I will keep in mind this recent market action and not make any certain assumptions of what the market must do, but will listen to what the market is actually saying. So, how the next rally takes shape will be very important as to whether we begin the rally to 2350 sooner rather than later.







http://www.marketwatch.com/story/if-you-want-to-trade-this-market-you-have-to-listen-to-what-its-saying-2016-09-12

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