Despite my focus being on looking in earnest for a low once sentiment soured so sharply especially in April, I have had some success hedging for poor outcomes at crucial moments. I do like to have backup plans in hand.
With the recent drop, many of my counts on individual names have to be reset, though others (like Alibaba, FedEx and a few others) still look good. But because I lack a unified look across companies, I don’t have a perfect grip on our location in a wave structure.
I would like to see a powerful and enduring rally, but, let’s look at what we can look at if this rally turns out to be soft.
We may view the S&P 500 as a hot mess, like this:
Now that target would pierce us below the 250-week EMA (see this article) and, I would expect, would provide us either with: a most powerful rally, or a permanent low.
The key will be this, I think: if 4000 becomes overhead resistance, this becomes more likely. If we can get 4000 as support, the odds favor the bullish outcomes.
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