The market has been under continued selling pressure and appears to be reaching a short term bottom, if not already established at today's low. I base this on a few reasons: 1) the S&P made a short new low while the Russell 2000 futures did not, 2) the current decline looks impulse has completed a 5 wave down move within a larger degree ((c)) wave down; and, 3 my custom indicators confirmed a buy signal on the VIX at the close today on the hourly chart.
First, attached is a wave count which counts a 5 wave decline complete at today's low at the Subminuette level. This completes Minuette wave (i) of Minute wave ((c)) of Minor wave 2. That may sound confusing, but the chart tells it all to where it makes more sense. With 5 waves down complete, I want to look to my custom indicators to see if I have any intraday oversold indications, or even better, if a long signal has been confirmed, so that I can be more certain the current decline is due for a correction right now. Looking at the hourly chart of the VIX attached you can see that a sell signal initiated last Friday and continued on almost all throughout the trading day today. But the sell signal is only confirmed when it closes beneath the signal magenta colored line, which happened right at the close today. A sell signal in VIX is a buy signal in the S&P, so I'm expecting a sharp shot higher for a good 20+ points for Minuette wave (ii) soon, that should last for at least 2-3 days.
So those are two solid pieces of evidence that tells me to be cautious on the bearish side right now as it's likely a sharp rally is on the horizon.
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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.
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