The market did nothing today, other than reverse a sharp rally surrounding the Fed announcement. The bulls are having a real tough time getting any momentum, or holding gains, so it aligns well with the trend being to the downside right now as projected. Above is one of two counts I'm watching right now. The decline counts well in the short term as a 1-2-3-4, with a wave 5 occurring on a break of 1085. Without a break of 1085, it will leave the decline vulnerable to being a 3 wave drop, which is a correction, and meaning it will make new highs soon after. This will become increasingly likely if the market goes above 1108 (the wave 1 low) before breaking below 1085. So breaking below 1085 is key for the bears at this point. Once the market does this, it will be very likely that a large decline phase is underway, and with it quite possible the decline is a 3rd wave at various degrees, it would make it a great trading opportunity with a stop just above 1131.
BULLISH COUNT
The fact that the market has not completed a 5 wave drop yet, and more importantly that there seems to be a clear triangle in the middle of the decline, make me hold this count above in equal probability as the first one I posted. If we only looked at a small window of time, and did not anticipate what might happen in the future, then this count would be the primary one since we have only a 3 wave drop with a clear triangle in the middle. Triangles can only occur in B, X and 4th waves, and a B wave would fit best here. A break above 1108 before going below 1085 would put this count as top choice. However a break below 1085 would make this count very unlikely, and put the bearish count up top as my primary choice. The breakdown of 1085 is key for the bears.
INTERNALS
Lastly, and briefly, I just wanted to further illustrate the market's "laboring" the past few days that has continued today. The market rallied strong midday but then reversed into the close, a theme all week. Also, as you can see above, the internals of the market were negative today as well. The bulls are having a tough time getting their legs under this market. So the advantage is to the bears, and as long as the bears successfully defend 1108 and take out 1085 soon, the bears will have a VERY firm advantage. We also need to see volume increase on the next leg down. Right now volume has been quite muted.
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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