Weekend Update…

Monday Update…

Not much to add, but I thought I’d just share a few feelings mainly. The charts could go either way at this point. Be careful in both directions…

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So what’s next you ask?

This coming week should be a tricky week as they will likely rally up to squeeze the bears at some point, before finally falling off a cliff into a large wave 3 down.  Early Monday morning could produce a sell off to fulfill the bear flag that was made during Thursday and Friday’s trading session.

Should it play out, then I could see us falling to around 1070 to fill that gap made on the 22nd of the month.  That would also fulfill the FP of 107.35 spy that we still haven’t hit exactly.  While we did come close with a 107.59 print, we might not have gotten close enough to call that print “fulfilled”?

If we do fall, I expect it to be bought up and a rally to start with an upside target of around 1100, before we start back down again.  This is opx week, and they will squeeze some bears out before taking it down really hard into wave 3, which could start as early as this coming Thursday or Friday.  While they could also delay it until next week, I wouldn’t be surprised if they start it this week.

In the past, they would pretty much have all the positions closed out by Wednesday of opx week, and Thursday and Friday would just trade sideways with light volume, closing out the week with little movement past Wednesday.  But that was during the last years’ run up to the April high.  The market was trending higher then, and the stimulus money was still being pumped into the market.

Now the market is trending down and the stimulus money is being taken out of the market.  Traders are now more on edge and quick to hit the sell button, should the usual data on Thursday and Friday not be viewed as good.  I’ve noticed that Friday’s haven’t been so boring ever since we peaked in April.

We have the Initial Claims, Continuing Claims, and Philadelphia Fed data on this Thursday… all of them should move the market.  So, if we rally for 3 days straight, and hit the 1100 area target on Wednesday, then Thursday could send the market back down again.

However, if we don’t rally ahead of that data, then I would expect the data to be spun as positive, and therefore cause a relief rally to put in wave 2 back up.  But, I’m leaning more toward a rally starting on Monday, after a possible early morning drop to key support and gap fill around 1070 spx.

So, down to 1070 Monday morning, then turn back up and run for 3 days to 1100 or so… and finally start the wave 3 back down on Thursdays’ disappointing data.  Will it happen like that?  Probably not, but that what I see in the charts right now.

Of course there is always the possibility that we continue selling off all next week, with very little bounces.  But the fact that it’s opx week tells me they will likely squeeze these new shorts out of the market before tanking her hard.  I just don’t know if it will start late this week or be pushed off to next week.  That daily chart looks oversold right now, and could take longer then I expect to reset back up and be overbought again.  We’ll just have too take it one day at a time.

For now, I give it a 50/50 chance of the bear flag playing out Monday morning, but whether it does or not, I expect a rally to start back up toward the 1100 area asap.  Too many bears on board now, they aren’t in the business of giving them a free lunch.  If you are short and haven’t sold yet, you might get your chance early Monday morning to get out.

If you can wait out the ride back up to 1100, then great… but most bears will likely exit and sit on the sidelines until another shorting opportunity is available.  Just be careful there bears as nothing goes straight down.  However, with that being said… this large wave 3 coming should be a bear feast.  I hope everyone is ready and makes a killing from it.

Red

Almost There...

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