Friday, October 30, 2020

SPX Update: Target Captured -- Inflection Time

Last update highlighted the next two target zones if bulls couldn't recover the base channel.  Yesterday, SPX captured the second of those near-term targets.

That gives the market the potential of three complete waves down (though it may need one more new low to be a three), and that means the easy money is over for the moment.

In conclusion:  In Elliott Wave, once you spot the first impulsive turn, then you know to expect at least one more impulse in the same direction.  From there, you can build in real-time and try to determine if there are still waves needed to make a complete a three wave move (an ABC) -- that's the technique that kept me looking lower from October 14 until today.  But sometimes, such as now, you simply don't know if the market wants to turn that three wave move into an impulse (five waves instead of three).

So that's how we saw this decline coming from early-on, then rode it down in real-time -- but now the market will have to decide if it wants to end on a corrective (three wave) decline, or extend that into an impulsive decline.  And in that regard, I'm just not sure. If the decline is to become impulsive, then it will still need blue 4 and blue 5 to complete a larger (black) bear (3)/C -- but I can't guarantee that happens at this stage.  If it does, then I have already sketched out the target zones for such a move.  On the other side of the trade:  If bulls want to turn it back up here, they do have that option. The first thing they'd need to do is sustain a breakout over the black channel and back into the red channel. If they can do that, then bears should probably at least be cautious. Trade safe.

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