Earlier, I looked into the face of my worst nightmare—the possibility of a 1-2. As I pointed out before however, I’m super skeptical of that because it would involve 10-20 trillion dollars coming into the market and I think the probability of that is virtually zero. Literally a laughable supposition.
But, I do feel like the market may be bottoming here, and there’s another “bullish” alternative that we can examine that suggests the top is near, not miles above us. So, not a nightmare, just a bad dream.
We have formed a bullish wedge complete with divergence. This will be invalidated if we sell off hard overnight. But I feel like we’re due for a bounce now. So let us see.
Other things I see: counting the Nasdaq 100 impulsively down is a stretch, though possible. I’ve seen a lot of bear flags and head and shoulders patterns and the measured moves on virtually all of them have been met. It’s greedy to expect more without new structures implying so.
$ES came right to the 38.2% retracement of the prior advance today right on the kisser. That is most frequently associated with 4th waves, and so we can give that a try. I am also haunted by the thought that distribution always takes longer and longer than many of us can ever even imagine. They are patient at their work whereas we small fish are by nature more impatient in our own work.
So, I can envision a rally here, and I can envision people who are beginning to have doubts because of the recent selling swerving far back over to overconfidence as we rally only to then have the bottom fall out just above us. I’ve pointed this out before, but the wave degrees I’m looking at way up here at the top suggest something big, and I would expect to see something more like February or August 2020 to show its face. 5-7% down before anyone realizes what’s hit us, that sort of thing. This dripping lower lets everyone get nice and hedged and the market won’t fall sharply under those conditions.
Maybe what we’ve done here is formed a left shoulder. Maybe we have a head to come. Sorry for the constant spitballing here, but are there a lot of things that can happen still. Once we really get going in a trending market, it will be relatively straightforward for long stretches.
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