Sorry for the late email (family emergency today), but the overnight BOUNCE from when we were in chat last night on the YM – NQ – ES did it – but that’s all it’s done.
This is a real mess with OPEX Week and threatening to end the OPEX pattern, but we saw the NQ use that -12% line to the penny last night (6801.25). Using the NASDAQ for form, it looks as if a nice 5 waves down is forming, yet the the gap fill to the 61.8% retrace for just a slightly lower low would be ideal to allow for a larger bounce which could save the OPEX pattern.
If we get 5 waves down it does mean odds decrease tremendously for a move above last week’s 2815.15 SPX high -albeit still possible assuming more whipsawing a,b,c waves – and I would preferably label the low as wave a/i of the larger c-wave down.
This fits with the daily charts of pretty much everything but the DOW where they all are below their 200d SMA and as said in the weekly email: all indices have done 3 waves up into their b-wave target zones and often reaching ideal fib-retrace levels.
Hence betting on highs above last week’s highs is becoming an increasingly more dangerous preposition.
Zooming in on the SPX, we can see it still has some room to go lower into the ideal wave-c/iii target zone between 2720 – 2705, but possible as low as 2685.
A move below 2680 will mean we should head to the mid- to low 2500s for that 2533 from FEB 9 faster than many would expect to see.
For now, I’m going to use the red support line off the recent lows for a warning signal:
There’s a lot of tricks and a lot of unknowns in this zigging and zagging, but the momentum continues to push for lower lows as this wave-c begins to develop (don’t forget DEC 5 (36/100 Declinations Power).
To make matters even worse, there’s a classic inverted head & shoulder pattern waiting to be denied completion at any moment for that push lower.
SPX DROP VIEW
Waiting for +2800 to show may never happen so for those who want in and want in calculated for it; I’d be focused on DEC 14 and stick with what’s here right now for strike without going much lower than 2720 (SPY 272).
Those who want the riskier view, go as far out as 2680 (SPY 269) and just ride within it on a break lower.
Add as it goes, but have the layering in started so there’s something there.
You have the AAPL & IWM warnings from yesterday… GS breaks 200 and we could see a massive drop to take out SPX 2700
GS 5 Day