A Morning Thought

Referring back to the ideas from yesterday (here), as we have failed to lose the supporting trend line this morning, it increases the probability of the pink A-B-C count I discussed last night. If we’re in any kind of a pink third wave down (instead of having just completed a pink A wave), I would expect this support to fail—maybe even dramatically, and it hasn’t. So, I’m going to watch closely to see if I can further develop this pink A-B-C count as we go along.

Keep in mind, we may still fail—it’s just that I would have preferred a gap down. Since I did so well yesterday, I am taking profits on all puts and I’ve opened a small call position in case we rally (and if we don’t, the long position is small enough that it won’t hurt). So, let’s see what happens: until this support fails, I’m a little skeptical of the immediately bearish view (I could always be wrong and we could crash from here, but I’ve never regretted booking profits, and I had quite a bit I want to protect here).

And given what may have been capitulation-like market behavior yesterday (above this support of all things), I’m less optimistic about too much further decline.

SPX


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