Tuesday, March 27, 2018

SPX Update: Bull Count, Bear Count

Last update concluded with:

In conclusion, note that the preferred count is near-term bullish now -- though I am only very slightly favoring this, and I'm far from 100% on it (not that anything is ever 100% in the market.).  One could almost say that I am borderline neutral until we see an impulsive rally from the market. 

We have not yet seen an impulsive rally (5 waves) from the market.  Yesterday we appeared to complete a large three wave move (an ABC), right at the first target I published in our forum (shown below) on Monday night (2677+/ was T1; the market topped 2 points shy):

If 2585 holds, then all of this is moot -- but we already know that, so today we're going to look at some additional options if 2585 fails, in order to gain a better understanding of what we'd need to watch for in that event.

The first options we'll examine are only near-term bearish, in the form of an incomplete C-wave (of red (B)) decline.  These would still ultimately lead to the larger (C) wave rally:

The wave structure since 2801 is anything but clear, which is disappointing, but there isn't not much I can do about that.  I mention it because this is why (beyond Target 1 above), my confidence in the lower target zones grows much thinner.  Target 1 is where a "textbook" C-wave in this position would bottom.  If we exceed that target by too much, then we obviously won't be dealing with a textbook wave.

If the picture is more immediately bearish and we're already working on the expected Big C/3 "crash" wave, then the chart below discusses some of the potential targets for that immediate bear wave:

In conclusion, the market has not yet completed an impulsive rally, so we have no confirmation yet whether 2685 was anything more than than a short-term low, and a trip to my original target zone remains possible.  If bulls can hold 2585, then all of this is moot, but it seemed prudent to examine the options if they can't.  Trade safe.

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