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Small short Dow at 28000 … stop 30000 … limit 26000
Closed at 27850
Never give up, never surrender.
SPX is a very interesting chart.
Unlike the DOW, SPX looks much more like a ‘five down’ not yet complete. The last couple of wiggles look like part of a triangle or flat for the 4th wave. Ideally these wiggles should complete in the 3,363 area and then SPX should drop in the 5th wave to around 3,323. This would very likely be wave 1 of a bigger five decline.
I’ve changed the overall count to show the end of wave ‘A’ at 3,313 followed by a ‘rising wedge’ thing for wave ‘B’.
This makes the wave ‘A’ drop 272 points.
What’s interesting is that if we are going for a C=A then we need a drop of 272 points from the B wave peak at 3,428. This wave 1 down, if it finishes at 3,323 will be almost exactly Fib 38.2 of the 272 points, strongly suggesting that it is wave 1 of 5.
For all this to transpire, SPX should ideally print wave 4 around 3,363 (but yesterday’s 3,358 might be enough) then drop to 3,323 to complete wave 1.
Wave 2 should bounce back to the 3,363 area. Then the market enters wave 3 down.
If any or all of this happens, it can actually all happen today (Friday) – we get the drop, then the wave 2 rally, and finally ending the day on a weak note as the market enters wave 3.
That would then open the door to a ‘Black Monday’ scenario as the market accelerates downwards in wave 3 in STD day 1.
Well we’ll see what happens. It all depends on how the pattern plays out today, and in particular how it closes.
Entry order .. Small short Dow at 28000 … stop 30000 … limit 26000
3rd time if filled .. 1st +250pts .. 2nd +150pts
Time for me to go shopping.
Never give up, never surrender.
So far yesterday’s early high which was critical to my plan has held.
My plan remains of a high in circa 3430 and hopefully 3100 next.
Let’s see.
Plan your trade, trade your plan!
Astros predicted a 2nd wave of covid19 in late September
which I posted on kpad.It’s a lot or searching to find that post but it did
contain a ray of hope by year end.Atm I think the UK is heading back to March 2020
Never give up, never surrender.
SPX: the ‘five down’ didn’t take shape as I suggested it might. But we did get the high at 3,363 and weakness afterwards.
Nonetheless I am still marking the decline as a ‘five’ to the low at 3,392, (with the wave triangle ending at 3,344)and that five is likely wave 1 of C down. The late rally is trying to form wave 2, probably in the 3,344 area.
Yes, this decline can also count as a ‘three’ (and it might be) but there are compelling reasons to stay with the five…
SPX daily: now lets look at the daily. SPX bounced off the 50MA twice during this sideways B wave, but on Friday it gave way and closed below. The RSI found resistance at the 50 line and is dropping again. These things are negative.
Now, the Fib 38.2 retrace of the entire virus rally lies at 3,065.
If we assume a five wave drop to 3,065 from the B wave at 3,428 we can draw Fib ratios to indicate how the five waves might unfold.
The decline from 3,428 to Fridays low at 3,292 is EXACTLY at the 38.2 line, which is where one would expect wave 1 to end.
That’s why I’m labelling this decline as a ‘five’ and as wave 1.
Wave 2 often (but not always) manages to rise to the Fib 23.6. That is exactly where the daily 50MA lies, suggesting that wave 2 will be a retest of tht 50MA from below.
These numbers and ratios are so exact that they strongly suggest we have entered a five wave C decline with a target of 3,065.
Of course it might all be coincidence, but for the moment I’m looking for touch of the 50MA at 3,344 for wave 2 and then a sharp decline in wave 3.
Cheers David … many things are now pointing to a drop into Sept EOM.
Never give up, never surrender.
Someone on Zerohedge pointed out that historically the market is weak in the week following quad witch, with an 80% negativity record.
Also, the people at Nomura have that the 270 level in the QQQs is critical for dealers/traders – below that level they may have to become forced sellers to square positions and preserve profits. The QQQs fell below 270 Friday and closed at 266.
DOW: just to add some caution, the DOW did indeed drop to the rising 50 MA where it bounced just as it has done in the past.
Also, I have difficulty seeing a ‘five’ in the DOW – it looks like a three.
Also note that the DOW did not make a new low for this move.
This of course creates a doubt for the SPX five down idea – if the DOW bounces again as it has in the past, that might change the patterns.
Clearly for the bearish viewpoint the DOW has got to crack through that 50 MA.
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