The S&Ps continue to consolidate and wrap up a triangle. Although not ideal, and enough to make an EWP purist pull their hair out, the above triangle patterns are valid. Don't get too caught up in technical rules and guidelines at this point, the important element here is that the market is not rallying impulsively off the lows on the year and it is moving sideways after a large move down. Triangle, or consolidations, are simply pauses in the preceding trend. In this case, the preceding trend was down, and hard. So the market will thrust lower to new lows on the year once this consolidation is over.
Wave E finishes triangles and they are usually the result of a news event. Next week we have CPI, Retail Sales, and some FOMC stuff later in the week. Since it's Friday today, and we're ending the triangle pattern, it's quite possible we'll just chop sideways all day today, and possibly Monday until we get that news event for a sharp pop and then massive reversal lower. But keep in mind, the news event doesn't have to be a scheduled event, it could be anything...something can happen in China, Europe, or also in the US that's unexpected.
The bottom line is that I'm positioning myself for a sharp thrust to new lows on the year, which should occur within a week or two.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.
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