Another day where the bulls can tout new index highs for the headline Dow and SP'500 indexes. Yet, as some are noting, there are still some signs that we're due a significant multi-week down cycle. The last two days have done nothing to negate the mid-term outlook.
sp'daily5b - best guess
sp'daily5 - mini H/S formation, with larger HS
I've adjusted my 'best guess' chart a little. I'm making the assumption that the Trans and Rus'2000 indexes are telling the real story. They both look like they are completing a wave'2 bounce - from the Friday low, and thus a wave'3 is STILL due.
I realise that to extrapolate from one index to another is not always a good thing, but right now, that's the best I can come up with.
A wave'3 - especially when taking into account a possible mini H/S formation, would be suggestive of sp'1505..if not even 1485 in the very near term.
Yet, I have to admit, when I look at daily chart '5, that sure looks a 'bold' and overly bearish outlook, but then, that's what wave'3s are meant to be, right?
Weekly chart...still bearish blue
I will again highlight the overly simplistic, but still useful weekly rainbow chart....
Despite the last two days, we still have a blue candle - the fourth consecutive one, and it is still a very important warning that we are probably at a key cycle top.
*For the record, I'm still short from the sp'1550s, and seeking an exit in the next 3-5 trading days, preferably <sp'1530
Wednesday is again quiet in terms of econ-data, but we have the FOMC minutes @ 2pm. Mr Market will be very much focused on that. Its hard to call how the algo-bots - and mainstream media will interpret what might have been said at the last Fed meeting.
What is clear, price action will likely be more dynamic than today. Considering the hourly index and VIX cycles, I have to believe we'll see a market snap down.
Video bonus - from Gordon T Long, with guest Ty Andros. It is somewhat serious macro-economics chat, but highly recommended for those interested in where we are headed.
Goodnight from London