I shouldn't be surprised at this since I've come out and called for sharp selloffs the past few months and probably each time the market has made a fool out of me. Looks like my bearish calls have become quite a contrarian indicator. I'm going to change that though.
With today's rise above 1322.88, the move down earlier this week is a clear 3 wave drop. So the simplist interpretation, which is what I usually follow, is that it was just an ABC corrective decline and the market should be resuming its uptrend now.
But not so fast bulls, the bearish count is still intact technically. The 3 wave decline may just have been a very small wave ((a)), and now we're in wave ((b)) which took the form of a "flat correction". Once complete, the market should then undergo a large wave ((c)) down as part of the larger wave Y of the "combination" correction I've been tracking.
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The next possibility is that the impulsive wave count is still intact and the funny shape is just a "flat correction" after wave (i) completed. I don't like this count that much because the flat correction is quite long and deep, which is unlikely for a flat correction. Although it's still possible so I'm keeping an eye on it.
Today's gap up formed what would normally be an "island reversal" but since the S&P was not in a confirmed downtrend we can't say that is the case. However it is interesting that we have a down gap and up gap in the exact same spot. If the bears don't drop this market soon and close the upward gap from this morning, I'd say that would be a very bullish sign for the days ahead.
So I was slapped by the market today and we are left with several options. I like to choose the simplist of outlooks because that's usually the correct one, which is that this week was simply an ABC decline and now the uptrend has resumed. The other options I mentioned are certainly still a possibility and any sharp reversal this week will probably move this bearish counts up on the probability chart. So I'm just a spectator now.
Now if you'll excuse me, I'm going to play in traffic for a little while.....
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.