Thursday, August 8, 2013

Short Update

Unfortunately, my personal life has necessitated a short update today, but there's probably not much required anyway.  We've reached a potential inflection point.  SPX has formed a five-wave decline, which suggests either a running flat (a variation on Tuesday's alternate count), or the start of a new leg down.  This provides us with a fairly reasonable bearish sell trigger at 1684, with the caveat that any decline below 1684 needs to show increasing momentum, since fourth waves are one place where triggers like that can fail spectacularly.  In any case, the pattern has the potential to turn into a head and shoulders, and that has to be respected as a possible topping pattern.

Without another break lower, though, and it's simply a back-test of the May high. 

In conclusion, the possibility does exist for a turn underway, but this could simply be a back-test of the May high -- so the next break should help point the way for the bigger picture.  Trade safe.

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