I can still see the same basic idea here regarding the S&P 500. And there are two things I can do with it at present.
The signals that are flashing warning signs right now persist in doing so. JNK is still week and diverging, the VIX might be giving me that cup I really want (7th chart here). etc.
So I am in “searching for a top” mode right now.
I’ve pointed out the red wedge we’ve been in (6th chart here). And if that was an ending diagonal, it does look to have overthrown, and it might be done, and if it is, we should keep moving lower:
A disadvantage of this count now is that ending diagonals, when they are done, tend to drop precipitously. We usually won’t need to ask, “Did you finish hun?” It’s usually very well-announced.
I like that we’ve dropped, but this is not—at least yet—a precipice. This is very slow and drippy.
In the spirit of “top picking is hard,” and acknowledging the excellent fibs just above us (here) I will show a count whereby we’re still in an ending diagonal (but a smaller one).
We can also be doing this:
I lean a bit towards this latter count at present, given the lack of a clear announcement of an ending diagonal complete. We can still overthrow this smaller structure. Lots of names remain at, slightly above, and many are just below their 200-day SMAs; I don’t know if more individual names need to actually tag their SMAs. We still have potential for lots of volatility between FOMC and earnings. So, overthrows can be big gap and craps. I’m open to that sort of thing still happening ahead of us here.
So, let’s see what happens. Until the risk signals clean up though, I remain inclined to that very bearish count I discussed recently (here).
Have a good evening.
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