Perplexing

Let’s look at a couple of things.


Yesterday, I pointed out the bearish wedge on the Russell that broke down and that we were backtesting (here). From that, one would expect the market to drop, and we did. But this stunning reversal is perhaps not quite what I would have expected. But, looking at $IWM now, I can’t say that too much has changed yet, despite the strange gap down and subsequent, huge short squeeze.

We are, after all, right back at the wedge again, as if we’re retesting it for a second time (green arrow):

IWM

So, hmm. I suppose we remain at risk again? It is hard to say. Almost 3% straight up from this morning’s low. Amazing.

I am perplexed by that. Was everyone short? I got the impression that very few were.


And the S&P is equally as much a mystery to me for the time being.

The consolidation we were in the last two days looks like it culminated in a triangle (green “B” just above us), which makes the whole decline odd, because I see no “2nd” wave above, to make it a “4th” wave, which may mean it’s just a “B-wave”).

If we’re in an ending diagonal (and i don’t know that yet), pink “3” should be a 3-wave decline, and so perhaps we’re doing something like this:

ES

Or, for all I know, orange “B” needs to get much bigger still.

There is quite a bit of guesswork on this for the moment. I will need to continue to observe the unfolding structure before I can say too much with any certainty.

What I do have confidence in right now is this: the advance off the 6/17 low looks to me to be corrective, and so that low should eventually be challenged. Whether we need to go a lot higher before we go lower is something I’m not sure of for the time being.


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