Here Are the Alternatives I See for the S&P 500

In yesterday’s post, I presented an argument that could support a move lower in the markets. The argument was predicated in part on the structure I am observing on Bitcoin. If it has entered a triangle of primary degree, it seemed plausible to me that equities were in a similar structure as well. On the basis of that, it seemed to me that we could have been within an internal wave of that triangle, like this:

ES

The consolidation we were in from 2/25 to 3/3 was a good candidate for a triangle, which should have produced another leg higher similar to minor (green) A. In falling apart instead, it seems to me to present us with a couple of options. It could still be a B-Wave (just not one that involves a triangle), which would look like this:

ES

Another possibility is that the observations on Bitcoin are wrong here, and that the February 24th low in equities was, in fact, the low. If that’s the case, then the move off of that low looks pretty good as a 1-2 right now (but for this to work, we don’t want to go much lower from here):

ES

The way we would distinguish between these two options is the height of the rally (if we get it). If 4500 is resistance, we should go lower again; if we can get through 4500, then we likely go to 4700.

There are also of course more immediately very bearish alternatives as well, but I see them as the least likely so will postpone seriously considering them until this bullish wedge we are in resolves into something else.

At today’s close, we had a “wall into the close” (panic selling), which is often reversed, so there is a good chance that we at least open higher tomorrow. How much and whether it will last is unknowable to me at the moment.


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