SPX has reached the reversal zone of an expanded flat corrective wave pattern. The book says wave B of an expanded flat reverses at 1.236, but I would n't be surprised to see futures pump it to the 1.272 extension at 3020 which taps the trendline from the jan 18 and oct 18 tops on Monday. For a preview, take a look at AMZN's chart... it hit a wall at the 1.236 on Thursday.
Scenarios:
1) If it finds new support and closes above 3020 my guess is we keep grinding up along the current wedge that terminates near the end of July (FOMC meeting... coincidence? I think not.) Number to watch here is 3087 which is the 1.236 extension of the oct-dec crash... where the same rules apply, tho the implications of a reversal there are greater.
2) If we reverse this week, we maaay correct back to that solid purple line that I drew a few weeks back. I don't think that line will break unless there is a significant catalyst (i.e. MOAR tariffs, trade talks falter, no rate cut, etc...) I'd then look for a double top w/ obvious momentum divergence at the FOMC meeting.
Absolutely DO short the market if the purple line breaks and rejects AFTER the FOMC meeting. I don't even care if they raise or cut rates, the media will paint that narrative however it wants to to justify the move. The important thing to realize here is that we are still TECHNICALLY in a corrective wave that began in May despite prices being at ATHs. This is also why I said the implications are greater if it reverses at 3087, because it could presage an eventual retest or a lower low than the xmas low within a year... which to many seems unthinkable right now. I know this all sounds very doomsdayish, but I'm not saying to sell the farm right now... simply painting a picture of what could and likely will happen if the market reacts negatively to the July FOMC meeting.
Trying to pick the top though is a fool's errand... If you absolutely need to be a hero and nail the top, then go for OTM Aug 19 285 or 290 puts as a lotto ticket. They're cheap as hell right now and it'll be fun to take a 10x ROI when you cash them in. The safe plays are to wait until a fundamental catalyst is in place... with the obvious one being the Fed. Also watch the AAII Investor sentiment index (quandl.com/data/AAII/AAII_SENTIMENT-AAII-Investor-Sentiment-Data) and nibble the sell side when it creeps above 0.4.
What do I think will happen? I'd say in this shitshow of a market you always have to assume greed and depravity is the modus operandi until a significant catalyst rears its head. Also the fibs from 3087-3100 line up well with existing support areas so yea... why the hell not?
Komentarz
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As expected traders sniffed 3020 and decided no mas... Here's what I see for the rest of the week.
Komentarz
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Fully expecting a retest of today's low in the next several days despite the strong close today... If 295/purple TL holds, I'm expecting lots of ABCs for the rest of the month as we consolidate going into the Fed meeting.
Also expecting lots of negative chatter regarding trade coming from the WH as they try to drum up volatility to encourage Powell to cut.
Komentarz
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As expected... retested right away and some. Expecting to chop around the previous ATH where it punches through on Monday and bounces back on Tuesday. I still think this is an expanded flat pattern so this wave down is an impulse, not an ABC so I wouldnt' trust the bounce too much.
Komentarz
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We double topped sooner than I expected and like clockwork the 1.236-1.272 area rejected price action once again. Looks like they're gonna try to take it up there one more time. Another rejection and I suspect this is the last we'll see of the 3000's for months unless the Fed cuts by 50 basis pts.
Komentarz
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This marks the 5th time price action has been rejected by the 1.272 extension of the May selloff around 3020. I'd expect it to tap the bottom of that small channel sometime today and retest last Thursday's lows. I suspect the dip buyers will take it up to challenge the 1.236 again. Regardless of what the Fed does, if we can't close the week above 3020, this puppy's turning around.
Komentarz
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I would aggressively short 2998 if it gets there... This isn't something we gonna come back from soon...
Komentarz
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I knew it was gonna retest that purple trend line, I didn't know it was gonna be so soon LOL... Like I said, always err on the side of greed and depravity. Great entry here for a short.
Komentarz
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.382 retrace hit. Some good scalps out there... AMZN, BA, XLNX, FB.
Komentarz
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Lots of trajectories... most of them down. 2895 has to hold for this current bounce. I expect us to flirt w/ the 21DEMA next week. .382 retrace is at the prev ATH and the obvious answer is a rejection there to draw the right shoulder. I think since this is a shark pattern we may retrace all the way to .618. We'll see.
Komentarz
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Wave 3 target at the .786 retrace was hit on futures late yesterday afternoon before a short covering rally took us to where we are now. I don't trust this bounce much, looks just like Oct 10 before they tanked it into the afternoon the following day. But it does infer a bounce is imminent. I'm selling this morning's rip and waiting for a large volume capitulation candle that at a minimum retests the .786. Might even grab some puts this morning if it goes for the median line shown here.
Komentarz
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Interesting if you look at the charts for SPX and SPY. SPY looks bullish w/ what looks like a double bottom on bullish divergence. But the chart for SPX to me looks like an ABC that just finished w/ an ending diagonal to complete wave iv w/ wave v set to begin. I still think we'll retest 2800 before moving any higher... but I guess we'll find out tonight.
Komentarz
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It might still go kiss the 21DEMA or the top of the downward channel but take a look at just how far we've retraced in 3 days leaving this v bottom dangling... I'm sorry but w/ the amount of volume that led the selloff and how much the VIX spiked there's a pretty slim chance we don't at least retest. Again I think we're gonna wind up drawing a butterfly at my target of 2660.
If this continues to play out, this will be one of the best pieces of technical analysis I've seen here...
UnknownUnicorn1020621
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Nice man. This is what I see, to be honest. https://Https://www.tradingview.com/x/XjU9YIfn/. Also if you look at your YXZB it matches the criteria for leading diagonal. Don't rule out the probability ;)
chinawildman
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@WaveAzzReaderz, Oh I am not ruling anything out at this point... I can definitely see a parabolic run to the 1.618 at 3330 a la Jan 2018 if the Fed does this "insurance cut". But we can't ignore the fundamentals here... there's no way that scenario is happening if the Fed hold rates steady in July.
DaddySawbucks
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@chinawildman, Looks like a TriStar forming, Weds would be the third star. A pullback of 3-5% might well trigger BTFD and surge to even higher high. Definitely gonna sell a bit soon.
DaddySawbucks
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@WaveAzzReaderz, I agree with WaveAzz' wildly optimistic projection. Expect completion of irregular expanded flat with stupendous, tremendous, Donald-sized ATH. Do not try to stand in front of this train!
Sintar123
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Awesome, I have the exact same thing
adgood4
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You are a sage...
Shiloh777
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Thanks again. Will see if you change your downside target.
lucamodena
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great analysis! good job ;)
Samoht10
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Thanks for the update, I was thinking abc as well, so I started shorting again this afternoon.