Market Direction and Stock Trends

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Weekend Analysis by Amateur Investors
By: Amateur Investors | March 24, 2018

The Dow broke out of its Triangle pattern this week to the downside and is close to retesting its previous low.



Meanwhile, as I talked about in late February, the 5 Day Average of the Put to Call was a concern as it only peaked just above the 1.0 level (point A) with the initial drop in February. In the past. a majority of the previous corrections didn't bottom until the 5 Day Average of the Put to Call Ratio had risen at least back to the 1.25 area (B). On Friday the Put to Call Ratio rose to 1.54 so it's possible the 5 Day Average could reach the 1.25 area next week.



Finally if we look at a chart of the S&P 500 one could theorize, based on wave analysis, that the current drop is "C" of an "ABC" corrective pattern. If "C" were to = the length of "A" that would yield a target area near the 2460 level. Furthermore note the 38.2% Retrace from the early 2016 low to the recent high is also near the 2460 area as well.



However, the one thing that bothers me about this being a simple "ABC" correction is that we already saw a somewhat similar pattern from the Summer of 2015 through the early part of 2016. Thus having the exact same thing happen again followed by another significant move higher would be unusual.



http://www.amateur-investors.com/AII_Weekend_AnalysisMar_24_18.htm

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