Wednesday, March 11, 2020

INDU (and SPX by Proxy): Early Warning of Inflection Zone

Last update saw the fourth wave count confirmed and saw the market enter a 7% down trading halt for the first time in years.  We then bounced briefly, before making (by pennies) another new low yesterday -- and bouncing again.  We appear to be working on a complex fourth wave at lower degree (a complex fourth within the fifth wave decline from the prior fourth, if you follow).  This suggests that another new low may still be needed to resolve things.

In fact, it's possible we'll get a new low, whipsaw directly and run back above yesterday's high, then whipsaw again and make another new low.  This is one possibility that's suggested by the charts at the moment, so keep alert to that.

That said, we are getting into territory that should generate at least a bit of caution from bears.  This is "bounce or break" terriroty -- either the market will behave as it has for the past decade and bounce soon... or we will have a true change of character for the first time since 2009:

On the big picture chart, we have entered into the inflection zone for the bullish "c of 2" count, which could be triggered by either massive stimulus, or a COVID-19 vaccination.

In conclusion, near-term, the market still appears that it probably needs another new low, possibly two more (in the form of a complex correction).  Bigger picture, we are into a (fairly wide, though not in relative terms) inflection zone.  Note that I fully expect I may be a bit early in warning of this, but such is my nature (and kind of the point, I think!).  Trade safe.

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