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Happy Weekend, traders.
In this weekend’s article, I will walk through what I now think will happen here over the course of the next month, and it will already be familiar to you.
The S&P 500 has had a terrific snapback from that deep sell earlier in the month, and has now been testing this channel that it broke down from, and it even came close to retesting what I’ve been calling the “Fitch gap” that was created when Fitch downgraded the U.S. credit rating:
It has tried 3 times up here to poke back into that channel and hasn’t made it yet, but I am not so sure it’s going to give up trying just yet.
From a medium-term picture, I am going to revive my
Zooming in a bit to the local rally, I think this leg of the rally is an impulse wave. Yesterday, I suggested that we could have seen a triangle forming, and I do think there is a triangle in there, but I think it is part of a running flat correction:
In other words, I think we may have only finished the 4th wave of a 5-wave impulse wave, and I think they may still go and challenge that “Fitch gap” above us in some way.
A more bearish alternative of course can put the 5th wave at today’s open, and that is possible as well. If we move down very sharply from here, then we have to go with that. But for now, I don’t think we’re done yet until they prove it to me.
You can see the little bear flag they kindly gave us:
I’ve been around just long enough to know that being handed one of these going into the weekend might be a trap. That is one reason I am sticking to futures for the time being. If I’m wrong and this bear flag breaks down, I can do something out it overnight in Globex, around the holiday trading hours if need be. But, for now, I don’t trust it. The running flat is a perfectly good wave 4, and we’ll see how we proceed.
Now I have some other arguments in support of the medium term structure that I think we are developing, and I will share those now in closing.
I hope everyone has an enjoyable weekend, and I look forward to seeing you next week.
Parts of this article may be reserved for members. You may learn more about becoming a member on the Join page.
You are also warmly invited to join our growing community in the Discord server (there are many public features in there). The invite link is here: https://discord.gg/58FSjcDhvG.