A Precautionary Look at the Ultra-Bear Count on $SPY

I don’t think is likely, given the nexus of what I look at; I would be surprised if this happened. But I was surprised by this morning’s drop as well, and so it’s possible that my entire orientation is wrong here so it would be irresponsible to not even acknowledge the more bearish possibilities.

I had been using this count for a while, but expected a much bigger drop where minute (blue) b now is (because at the time I thought my blue a was green 2). But by then, high yield debt rallied hard, and many of the other things I look at improved, so I dropped the count.

However, maybe minor (green) 2 wasn’t finished yet at the time, and perhaps it is now. And if that’s the case, then perhaps we’ve been forming a series of ones and twos to the downside ever since and maybe that’s why I’m not capturing these present waves correctly.

So, I would say: if we can rally above this morning’s high, this count would become far less likely. But if we fail to produce a strong rally soon, then it remains possible.