Friday, December 14, 2018

SPX Update: Market Teetering... Will It Fall, or Can Bulls Right the Ship?

On Wednesday, the market formed what appeared to be an ending diagonal near the highs of the session, then dropped like a rock late in the session, which is the expectation after a completed diagonal.  The question now is whether that diagonal represents part of a b-wave, in which case SPX could retest the zone between 2584 and 2620 (I know that's a large range -- likely closer to the low end), or whether the diagonal was ALL OF wave c of a smaller wave 2.

If it was all of C, it is a VERY bearish pattern, and today/Monday could see a nasty sell-off.  If it's part of a b-wave, then SPX would likely hold 2583 or thereabouts.  Thus 2583 is the first level bears need to claim and sustain trade beneath, while Wednesday's high is the level bulls need.

The easiest way to look at it is that the market remains bearish at all time frames as long as it holds below Wednesday's high.

In conclusion, there's no true resolution to the near-term pattern yet, but there are hints that things MAY be about to get even more bearish.  We'll see how today goes.  Continue to keep in mind that, at best, bulls are looking for a near-term reprieve.  Longer-term looks bearish either way.  Trade safe.

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