The market likely bottomed into the close yesterday with that fast drop to make a slightly lower low. The short term wave count is very hard to figure out, but everything points to the last rally up to the FP of 787.13 on the SPY starting now. It still should top between October 2nd and the 6th, but I don't know which day it will happen.
If it happens into this Friday it's the short of the year I think. If it drags out into next week that's fine too, and I'll be ready for either one. Once it's hit and pierced the market should rollover and start a decline that will likely be very fast and will bottom at either the fake print of 716.58 or 714.68, and the window for the final low is the 16th to the 28th... but, we could see two drops. I know I've mentioned the 600.14 FP many times as a possible "final" low but Trump really needs to have this midterm elections be a win for the Republicans, so I really don't think that kind of drop will be allowed.
I suspect that any drop that happens early to mid-October will wake up the bears massively and they will short the bounce big time. That tells me that there will not likely be another huge drop to hit the 600.14 FP into the end of the month. Instead, it will be a controlled drop that could just put in a higher low, or a double bottom low. Meaning that we could just hit the FP of 716.58 on the first drop, and then 714.68 on the second drop. I posted a chart on X about it, and below is that chart.
Now it's possible that bot the 716.58 FP and the 714.68 FP get hit and pierced on the first drop, and then I'd look for a higher low into the end of the month instead. Basically, the hitting a piercing of the two FP's will end the correction and then a wave 1 up will follow, which should be 50-61.8%, and then the drop after that, which should end by the election, will not take out that prior low but will be maybe only a 61.8% or even at 78.2% retrace.
The point is that it will be a higher low and every bear in the world will be looking for the prior low to be taken out, but it won't. Instead it will trap them in a short position to fuel the wave 3 up to follow. This is of course just my speculation, but you have to look at the "fear factor" of the first drop.
If it's really spikes the VIX then all the bears will see it and will short heavily the bounce back up, but if the first drop is slow and controlled then the bounce should only be 38.2% to 50%, and with that scenario I'd be open for the second drop to be a massive one that could hit the 600.14 FP... depends on where the first drop ends? If it pierces both the 716.58 FP and the 714.68, and again, does this drop slowly and controlled, then the 600.14 FP is possible. But if we only pierce the 716.58 FP on the first drop I'll lean toward the 714.68 FP being the low for the second drop into the election.
Of course that suggests that the bounce back up will be at least 61.8% and that it will chop awhile before rolling over for the last drop, and that drop will be the scary one. It's all very fluid and I have to wait to see how it unfolds. But I suspect the first drop will be over by the 10th-16th, which again... could be the lowest low. Then the bounce and either a higher low (a wave 2 pullback) or lower low (a C wave) to either the 714.68 FP or the 600.14 FP. Lot's of variables here, so I have to see where the first drop ends at to forecast the second drop. I'll repeat this again... if we ONLY pierce the 716.58 FP on the FP, and DO NOT hit and pierce the 714.68 FP, then that lower FP could be the low into the end of the month or election. Or, if both the 716.58 FP and the 714.68 FP are pierced on the first drop then the door is open for either a higher low for the second drop, (no FP for any target... 61.8%?), or the 600.14 FP for a crash low.
How to trade it... for me I'll be targeting the 716.58 FP and the 714.68 for the first drop and where I'll exit and go long for at 50% to 61.8% bounce. I might skip the drop after that (depends on what happens) and will look for the next long around the election at whatever price it falls too. That's my plan... good luck to everyone that trades it.
Have a great weekend.
