A Quick S&P 500 Recap

I’m just going to take a quick moment to reiterate my evolving thoughts.

Though I had been fairly convicted about the bear wedge hypothesis, it required a move lower that should have had a good impulse wave at some point. And while we did, in fact, move lower all month as expected, late last week I began to have doubts about further continuation of that:

  1. We never got a nice acceleration lower, and it’s over due at this point. Wednesday or even Thursday should have involved a gap and go down but it’s just not there.
  2. The AAII survey came out on Thursday and the historic absence of bulls was quite a shocker to me. I can usually get a pretty good grasp of sentiment on Twitter, but it’s entirely unscientific, whereas the AAII survey is broad, well-conducted, and captures people who actually really matter: fund managers.
  3. And finally, the greater structure reached a wave balance that opened the door for a major correction to be completing here.

Accepting this new incoming evidence (as one must always do), I think there are now greater odds of us going up from here rather than lower at this point.

And today’s price action only added to the thoughts I had last week about what’s unfolding at present (see especially the last chart in this post). If we’re in a big bearish move, we almost certainly need to be in a big, obvious impulse wave down at this point, but everything from Thursday and today looks merely corrective: sloppy and overlapping.

I’m not settled on a count just yet, but we may count the overlapping structure from the end of last week and today as a diagonal, perhaps an ending diagonal as depicted below.

If that is so, and if we find support at this level (giving us equality between primary [pink] A and C) we may begin a powerful rally at any moment.

SPY


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