Some Thoughts on the Indices

Nothing much has changed my thoughts on the indices yet, since my last posts regarding them. I continue to look for a continuation of this corrective period. But, I have a bit of crayon work to share.

The $SPY thought I expressed yesterday seems to look good still, as we have yet to take out lower lows and the lower trend line on that hypothesized pattern has been supportive. Using the general idea of that as a guide for the other indices gives us a few things. We probably need to go “up and then down” again to complete the correction. So, using that general drift, we can speculate on all three indices. I will show some examples here.

So on $SPY, we may have completed a and b of d. If this is true, then we should advance in 5 waves to the orange c above us, before pulling back for the e.

SPY

On $QQQ, our falling wedge may give us an idea of where we’re going next. We should move in the direction of the orange b in three waves. Interesting that the Naz is making lower lows against the Spyder’s higher lows. Behold the power of yields and the dollar. So, while we may go up for d, then back for e (making another higher low) on $SPY, here we may go up for b, then down for c, making a lower low here.

QQQ

And finally, whereas the other indices are in corrective wave fours (I believe), $IWM appears to be in a very bullish two. We lack a structure on it to use as a pointing device, so I will note fibs instead. The lower end of the orange box is where a “two” here is expected to go. We may rally to the ugly purple b, then fall again to c, going lower than the a to complete the correction, perhaps to the lower end of the box or so.

IWM

So in each case, I’m expecting us to sort of move up together, then down together, then all of us beginning to move up together from there, but perhaps in differing magnitudes. Which index will be the strongest afterwards is hard to guess here, and will depend on bonds, but the Russell may be entering a third of a third of a third, whereas the other two are entering all these fours and fives, so perhaps over the coming weeks or months, tech may feel lethargic compared to small caps, though they should all sort of ebb and flow together.

That’s my guess for now.

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