In my analysis of 17 Nov. I wrote about the ‘window of risk’ from 22-29 November, based on the lunar eclipses. We are still within this risk window. The projected top at 16550 was reached exactly on 22 November and price declined since then. Two specific pitchforks can help us navigate this correction.
Bullish Mod Schiff Pitchfork (green):
Price got rejected at the upper boundary (dashed line) as expected. The median at 15850 and the bottom at 15000 can be potential supports. Price reacts well to the fibs within the pitchfork, but I have disabled them to keep it simple.
Corrective Andrews Pitchfork (red):
This pitchfork is based on the previous corrective wave. The median is around 15400.
Elliott:
We can count an abc (in green) to the downside. This can be part of a larger wave (a), should the correction become more complex.
Narrative:
Officially the market reacts to the Omicron variant. We can see that pandemic stocks like ZM and PTON spiked up. The real reason, however, might be that markets fear the Fed’s response to the variant, as the Fed could begin to take inflation more seriously. Another lockdown might be a temporary disruption (the market knows the drill by now) but likely not the single reason to substantially re-price equities.
How I trade it:
Under ‘normal’ circumstances the blue reversal zone would be our target for the correction. The red pitchfork median is at the 1.618 extension of wave a, providing potential support in the same area. The idea is to carefully (!) build back long exposure when we see that bulls step back in around that area. Monday, 29 Nov. is a critical date as it stands in opposition to the lunar eclipse in May.
Bullish Mod Schiff Pitchfork (green):
Price got rejected at the upper boundary (dashed line) as expected. The median at 15850 and the bottom at 15000 can be potential supports. Price reacts well to the fibs within the pitchfork, but I have disabled them to keep it simple.
Corrective Andrews Pitchfork (red):
This pitchfork is based on the previous corrective wave. The median is around 15400.
Elliott:
We can count an abc (in green) to the downside. This can be part of a larger wave (a), should the correction become more complex.
Narrative:
Officially the market reacts to the Omicron variant. We can see that pandemic stocks like ZM and PTON spiked up. The real reason, however, might be that markets fear the Fed’s response to the variant, as the Fed could begin to take inflation more seriously. Another lockdown might be a temporary disruption (the market knows the drill by now) but likely not the single reason to substantially re-price equities.
How I trade it:
Under ‘normal’ circumstances the blue reversal zone would be our target for the correction. The red pitchfork median is at the 1.618 extension of wave a, providing potential support in the same area. The idea is to carefully (!) build back long exposure when we see that bulls step back in around that area. Monday, 29 Nov. is a critical date as it stands in opposition to the lunar eclipse in May.