And Let’s Look at How We Might Count the Decline

As I’ve noted, about 48 of 50 analysts I follow are expecting us to be in the midst of a third wave decline, but as I’ve discussed before, I am still skeptical of that.

Let’s take a look at the decline from the day prior to CPI going forward.

All in all, despite the waterfall into the close today, we’ve only taken out the prior lows by about 45 points. And something seems fishy about that to me. I know what a 3rd wave  decline feels like, and this doesn’t feel like that. We gap down 200 points and I’m going to have to say, “Well, that’s what a 3rd wave decline feels like.” But a 3rd wave should come off of a high. And so this all seems odd to me.

I’ve gone through all the fibs here now, and its seems more likely to me that we’re not in the midst of a 3, but more probably at the end of 5 waves complete. There are 3 distinct declines (the orange 1, 3 and 5), with two periods of consolidation (the orange 2 and 4). There are goods fibs. And the straight line capitulation-like drop might be a good place to stop. Also, volume was high today (on the es-mini futures contracts), but not as high as the volume spike from the other day. Now, for this count to work, we can’t go an inch lower, as that would then make the 3rd (orange) wave the shortest. So we’ll find out tonight if this is right.

SPX

And furthermore, in addition to the declining volume, breadth actually improved today. ??

Both the ratio and the NYSE advance/decline difference. Not only is there divergence between lows, they even upticked today versus yesterday.

BREADTH

So, signs of bottom, typically. Now things don’t look good at the moment, but I remain hopeful that we’re at or near a major bottom.


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