Since the dollar has been a far more useful gauge of volatility, let’s take a look.
On the one hand, this simple trend line support looks bad (for equities):
That is finding support. And if we see continued dollar strength (in this environment—right now equities and the dollar are inverse forces and that is not always the case), equities are more likely to follow the bearish path.
However, there is another trend line. Let’s zoom way out:
I am expecting Pink C of Yellow b to be put in place soon:
But if use a different origin for the trend line, we get this, and we also happen to be a great fib relationship for the legs of this large structure (the 78.6):
And that is why, despite the news flow and the macro environment as we perceive it (and our perception of that could be wrong—smart money could have a totally different understanding of affairs right now), we cannot rule out the bullish case.
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