And Here’s a Look at the Bearish Scenario

I have looked at what I would like to see if we’re bullish. Now let’s see what things look like for the bears.

If we’re bearish, we need this to be either a 2 or a 4 or something—some corrective rally. And the best way i can see for that to happen is no different than how I have been: it almost certainly must be some kind of expanded flat. One issue is this. If we’re actually just squeezing the bejeezus out of shorts before a plunge, we’re not by any fibs here at the moment:

SPX

We are well in between fibs. That may mean we have further to go. On the other hand, it is possible to place the blue b in a different place, and we get this:

SPX

We are near the 1.272 extension this way, and we have five little oranges unfolding for the blue c. So, it’s possible. Sometimes when we consolidate tightly like this, it’s a top, like we had just prior to the CPI dump.

So, I can’t rule this out.

This is the breakout I was referring to on Bitcoin earlier in the last post:

BTC

It’s a good sign, but last time it was a fake. Don’t know if this one is. My count suggests it needs another low, but that count may be wrong.

And the dollar, finally giving up the wedge, has only crashed into the long-term trend line. Not sure if that will hold. If it does, this can become bullish again:

DXY

And finally, the VIX, truth be told, hasn’t broken down all that much given the size of this pump, do you think?

VIX

Dunno. I mean, it’s still up here. Could still breakout I guess.

So, anyways, I guess I’m sort of agnostic. If it’s a counter trend bounce, it can fail, but it’s also the kind of initial rally I would expect to see in a new bullish cycle. So, I guess what I’ll do is: on any sign of weakness, I will take back the puts I took off this morning on the open, but I’ll add them back at a higher strike. For the bullish case, I do think it’s imperative to see a full 5-wave advance unfold. If this just fails suddenly, that won’t be too good.

RTY is here, back at this trend line that I previously thought would find support:

RTY

But now from beneath. Will this be hard resistance? Could be. So anyways, I guess I can support both scenarios for now. Honestly though, I still really don’t like the look of the VIX. Anyways, let’s see what it does. Maybe I would I lean bearish still until I can see the 5-wave advance, and until Bitcoin proves its breakout is not a fake, etc.


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