A Couple of Notes on the Markets

A few remarks for the day.

My main interpretation was that we were completing a primary (pink) 2 last week, and that we would enter a primary (pink) 3rd wave. With the CPI print, we then did get quite a spill. We crashed to (but not through) the trend line support generated from the June and July lows (orange trend line):

SPX

This is now the 4th time we have revisited that line. It is a place at which we can gap under it. And if we do, I would expect us to be in a third wave of some degree, perhaps the minor (green) 3 of intermediate (orange) 1 (the orange 1 can also go much lower, too, I’ve just placed it there as a possibility):

SPX

Given that we are at support, I will also note that the $VIX hit fan line resistance during the session—also coming to but not through a level:

VIX

We had a huge volume spike on the S&P e-mini futures (over 3 million contracts). Oddly enough, that can occur at lows, as it can be a sign of capitulation, strange as that sounds coming off of a recent high. But, it’s not something we should immediately ignore, as we haven’t yet actually broken support.

IF we don’t gap down there is another way we can count the decline from the August high, as one full 5-wave move for a primary (pink “A”):

SPX

The fibs are good and it would explain the volume spike (if today was capitulation—I don’t know that yet).

So, in sum: I think it is possible for us to gap down and finally break this support. But, if we don’t and today’s violence coincided more closely to a low, then we might move up and to the right for a bit for the pink B as an alternative.

We need to break support, we haven’t yet, and so I need to have something in mind in case we don’t (but if we don’t here, we probably will later, after the pink B).


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