Next Few Weeks If We Bearish

This is a more articulated version of this that I worked out last night. The problem with that count (though it’s similar to this one) is that there isn’t any divergence on the RSI “within” the pink 3 as I had it labelled there. And that inclines me to think that we’re not approaching the end of pink 3 but are rather approaching the 3rd wave only within it.

**This count is only IF this proves to be a bull trap.

Personally, despite my having been interested in looking for a low after I caught the CPI plunge, I have a queasy feeling as I watch all the permabears call for a low here. At any rate, if it’s not a low, and we drop hard soon, I would expect us to be in the central part, the blue 3 of the orange 3 of the pink 3. And if we do get a plunge, we should have an ugly, grindy, scoop-like bottom that might take some time. But there are lots of trades in there.

SPX

We go shooting up, that’s fine too, as sentiment is poor, breadth is still diverging, etc. All signs of a low. But honestly, at the low, I’m sort of expecting a 5% upside day and this (so far) feels like short covering. I could be wrong. I will keep some calls in case I am, but I have rebalanced again so that really, I’m now short with a hedge. So, still calls and puts, but decidedly more puts because I don’t like this yet. If we do have a major low in, there will plenty of opportunities to get long later, I am supposing, and I think I would rather wait until I see less bottom calling.


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