The main reason I write on this blog is to show that markets are fractal, an assemblage of fractals that is creating patterns as discovered by Elliott. I also want to show that it is much easier to label the past than project the future. Nevertheless by using other tools, a lot of common sense AND refraining to marry your count, you can put the odds on your side or get out of harm's way when things don't go as expected.
This past week action was a prime example of that. A week ago a waver could make a case a top was at hand by labeling the action from the panic low as a counter trend rally namely a simple ZigZag. Even the least bearish scenario using the financial index shown last week, we were ending a 5 up demanding a corrective decline. We also had indicators flashing overbought while the market was repelled by resistances.
We did get a pause but much muted than expected. If you paid attention many clues were there hinting markets were not ready to fall big. At least not at this time. We are using the continuous chart of the Nasdaq as it sports the cleanest count. We always look at these 24-hours price action charts provided by Tradingview. Symbol for the Nasdaq is NAS100, for the S&P500 is SPX500 and for the DOW is US30. Sometimes they offer a better view of what to come. Here what we saw:
1-The decline from Friday 16th to the 20th was a choppy overlapping affair i.e. corrective in nature
2-The ensuing rally was only 3 waves up, part of a correction. ( very clear in the daily index ) Furthermore, the Nasdaq was making new high but not the Dow or the S&P a big hint we were in a wave B. Divergences are often seen in B waves.
3- The ensuing decline was short and sweet complying with the guideline of alternation. If wave A is a slow grind, wave C will be a sharp short affair or vice versa. ( hence my scenario for the larger picture to have a slow descent back to recent dramatic low as the first wave was definitely sharp and short)
4- Another hint was the VIX closed lower on the 21st with even the print high and the print low being lower than
the previous day.
5- The ensuing overnight action was quite impulsive followed by a corrective decline stopping right at the 61.8% retracement
Therefore all that put together was a big flag the market wanted to move up again. It complied and it remains to be seen where exactly we are going with all that. One thing for sure using this continuous index, moving below 6640 will suggest a larger correction is in play.
We will try to update that chart this week once a clear count emerges.
Thanks for reading.
This past week action was a prime example of that. A week ago a waver could make a case a top was at hand by labeling the action from the panic low as a counter trend rally namely a simple ZigZag. Even the least bearish scenario using the financial index shown last week, we were ending a 5 up demanding a corrective decline. We also had indicators flashing overbought while the market was repelled by resistances.
We did get a pause but much muted than expected. If you paid attention many clues were there hinting markets were not ready to fall big. At least not at this time. We are using the continuous chart of the Nasdaq as it sports the cleanest count. We always look at these 24-hours price action charts provided by Tradingview. Symbol for the Nasdaq is NAS100, for the S&P500 is SPX500 and for the DOW is US30. Sometimes they offer a better view of what to come. Here what we saw:
1-The decline from Friday 16th to the 20th was a choppy overlapping affair i.e. corrective in nature
2-The ensuing rally was only 3 waves up, part of a correction. ( very clear in the daily index ) Furthermore, the Nasdaq was making new high but not the Dow or the S&P a big hint we were in a wave B. Divergences are often seen in B waves.
3- The ensuing decline was short and sweet complying with the guideline of alternation. If wave A is a slow grind, wave C will be a sharp short affair or vice versa. ( hence my scenario for the larger picture to have a slow descent back to recent dramatic low as the first wave was definitely sharp and short)
4- Another hint was the VIX closed lower on the 21st with even the print high and the print low being lower than
the previous day.
5- The ensuing overnight action was quite impulsive followed by a corrective decline stopping right at the 61.8% retracement
Therefore all that put together was a big flag the market wanted to move up again. It complied and it remains to be seen where exactly we are going with all that. One thing for sure using this continuous index, moving below 6640 will suggest a larger correction is in play.
We will try to update that chart this week once a clear count emerges.
Thanks for reading.
