Make or Break Elliot Wave Count: The capitulation

Update on my previous idea.

It's still make or break for the bear market right now. Personally, I don't see us breaking out of the downtrend. But a fake-out was always possible, and this seems to be what we got following softer than expected inflation data.

Note that this technical analysis is a small part of the bearish case.

The wider macro-economic environment bear case speaks for itself. And in my opinion, nothing has changed. The fed remains hawkish and monetary policy remains contractionary. Recession indicators have clearly rung their alarm bells.

I also don't think the 'fed pivot' is the ticket out of here - history shows that more downside follows in the stock market even after the fed pivots - this is because the effects of their policy decisions don't change overnight. Economies take time to respond.

To conclude, I think there is still downside in the SPX, as shown in the chart. But, if we break out of the downtrend line with conviction, I would reassess. But I do think we are still to see the full effects of contractionary monetary policy in earnings and employment figures. But we shall wait and see.

I'm long volatility via VIX Call options and CFDs.

What do you guys think?

*not financial advice.