sp'daily4 - bearish scenario
sp'daily2, rainbow
sp'60min
Summary
First, regarding the daily'4 chart..
After today's significant ramp higher, I've updated it with the assumption that minor wave'4 (black) is complete. Although we don't really have confirmation of that until sp'1530 is broken above.
What I just want to emphasise though is that even if we do decline tomorrow - and into Friday, I'd still expect at least one further up cycle into mid-March.
Rainbow madness
The rainbow (Elder Impulse) daily chart for the sp' is a really bizarre mess. The last 7 trading days have seen some severe flips in the signal. In theory, its again possible that we'll open a touch higher, only to drop heavily later in the day. Yet, Monday had the bearish excuse of the Italian elections, what might be the excuse tomorrow?
The Permabear Plan
I'm going to be keeping a VERY sharp eye on the hourly charts in the opening 30 minutes of Thursday.
If I'm going to take a new index re-short, I want to see a red hollow reversal candle on the VIX - as we saw early Monday. I'll also want to see opening weakness in equities or a failed opening minor rally - with perhaps a few black/fail candles on indexes like IWM or Transports.
So long as we don't break >sp'1525, I'll keep an open mind on re-shorting early tomorrow.
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*Bonus chart*
Copper, weekly, 2yr
I wanted to again highlight Copper, as its a good barometer of the commodity market, and in many ways, its also important for at least some equities.
As you can see, Copper remains a mere 8 cents from breaking under the very important 3.50 level. Any move into the 3.40s - whether tomorrow/Friday, or indeed, the weeks to come, would be a real warning of general market weakness.
Looking ahead
Thursday has a trio of very important pieces of econ-data that will give Mr Market the excuse to move. Interestingly, we have GDP - second reading (market is expecting a revised number of 0.5%, vs -0.1%), and the usual weekly jobless numbers. However, perhaps most important of all is the Chicago PMI number. Its currently @ 55, bears should be seeking a recessionary sub'50 number. If the latter were the case, we'd likely see a very spooked market.
Lets see if February can close in a stinky way for those deluded bull maniacs ;)
Goodnight from London