Wednesday, March 8, 2017

SPX and RUT Updates

Last update, I stated that I was inclined to think we'd see further downside, which has since happened.  Although we're in the zone of the first "red 4" label on the IT SPX chart, it's not clear to me whether or not the downside is complete at larger time frames, and the near-term pattern has turned into a choppy mess.

I would at least note that this is being counted as a fourth wave, and confusing patterns are the norm for fourths -- so don't be surprised if this chop continues for a while.  For example, we could see a near-term rally followed by another leg down, and the market could thus extend the move sideways/down for even several weeks if it wants to.  I can't predict that from the market's current position, but that potential needs to be kept in mind.  Since we tend to "want" the market to move in a more linear fashion, it's human nature to anticipate quick resolution -- especially after the fast linear rally we just came out of.  I'm simply warning that "quick resolution" does not have to be the case here.

SPX reached the zone near the first red 4 from last update, so it's always possible that's it for the downside, but I do think it's prudent to at least be aware of the potential for a confusing chop zone to develop.  

RUT looks like a B-wave into the recent 1414 high, which would make the current decline a corrective C-wave.  RUT has already reached its minimum downside expectations, and I've noted the red trend line as the next zone to watch if the downside continues:

In conclusion, in the last update, more downside looked likely, and we got that -- but now it's currently unclear if that will be all she wrote for the entire correction, or if it's going to become more complex by adding another wave up and another wave down.  Hopefully the next few sessions will help answer that question.  Trade safe.

No comments:

Post a Comment