Wednesday, April 1, 2020

SPX, NYA: Bull Option

Readers have no idea how much I wrestle with posting certain counts.  No idea.  My worst fear as an analyst is never about "me personally" being wrong.  Who cares if I'm wrong sometimes; that's the way of the world.  And my calls, especially my big calls (such as for the crash recently) hit at a pretty high percentage, so I figure I should allow myself a whiff here and there.

No, I wrestle with posting them not because I worry about being wrong, but because I don't want to steer anyone else wrong.  Since day one, that has been my biggest fear -- and now, after many years, I've realized that it just never goes away.

So I want to stress today that yesterday was a pretty big inflection zone (as we've been discussing recently), thus if my preferred read is WRONG, the market is likely headed to new lows from here.  (It didn't help that I found more ambiguity than I had hoped in the micro counts.)

With that caveat out of the way, let's look at the charts.  First up, my preferred count is that yesterday's high was the B-wave of an expanded flat.  Expanded flats are corrective patterns where the market makes a new high (or new low, if pointed the other way) in wave B... it then declines in an impulsive C-wave, which ends the correction.  From there, it typically rallies back up to break the B-wave high.  The impulsive C-wave is designed to throw EVERYONE off the market's scent.  C-waves are strong moves, and the impulse structure causes people to believe that it's the first leg of a new wave down, when in reality, it's the LAST leg.

This makes them very tricky.  This is, in fact, a smaller fractal of the move that I believe has occurred off he all-time high (B-wave high, strong C-wave crash wave).

The pattern above is one I spotted forming in real-time, and I discussed it in detail on the forum.  My first read is USUALLY the right one, so despite finding some gray evidence tonight, I'm holding to the above read for now.  Bigger picture, I suspect it MIGHT play out something along these lines (below) -- but this is highly speculative this early in the game and subject to change as more waves develop, so take with a grain of salt:

Also, don't fail to notice that an IMPORTANT resistance zone was tagged.  Today's open will represent a rejection at that zone.

Next up, let's look a little harder at what else bears have going for them.  First off, we see that SPX finally tagged the upper boundary of the blue channel, which I've been anticipating for a while:

Finally, here's the market that puts at least a little doubt into the idea that yesterday's high was a b-wave, and thus adds some ambiguity into the mix:

In conclusion, my lean is that yesterday's high was the B-wave high of an expanded flat correction, and thus that the market will rally back up to exceed that high, after wave C-down completes.  But it's not quite a "sure thing," so take appropriate precautions.  Bigger picture, the zone around yesterday's high continues to represent an inflection, as discussed previously.  Trade safe.

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