Well, the nasdaq continued its downtrend by wiping out all the early gains. The financials decided to take a day off and kept the S&P500 above yesterday's lows. I see only two likely scenarios from here:
1: We tread water for the rest of the week (see top chart) and then plunge possibly starting on Friday. At this point, ES can't spend more than an hourly bar below 676 otherwise we will likely plunge immediately. I just don't see any upside rallies likely taking hold, so at best I think we tread water in a w4 triangle. This would set us up for a quick plunge and then a quick reversal as it goes with triangles.
2: We breakdown starting tomorrow (see bottom chart) as the Nasdaq acts as an anchor around the market's proverbial neck. This should push us to the 600 area very soon.
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Thanks for your great work! I just need to ask, is there any possibility that we may already have placed 4 (at 745) and 5 (at 668)? this wave up seems so impulsive instead of corrective...
ReplyDeleteamanda,
ReplyDeleteshort squeezes always feel impulsive, but in the end it is buying that makes the market go up and not short covering. I don't see any reasonable odds of a low being put in.