intelligent_investing
Short

S&P500: 2905 was your warning level

SPCFD:SPX   S&P 500 Index
In yesterday's premium member daily major market (see here) I already warned that a move below yesterday's low at SPX2905 would tell us the market would most likely to go lower. And so it eventually did. I say eventually because,and of course, it (had to) whipsaw hard first when it did dip below 2905 briefly this morning (first mouse gets the squeeze...) only to go green, and reverse hard (second mouse gets the cheese...). That leaves us with a possible impulse pattern to the downside being underway. See also herehttps://twitter.com/intell_invest/status....

Because the downside is extending beyond "normal" third and fourth wave Fibonacci extensions and retraces it is currently prudent to look a bit lower. See chart. Once the mid-2800s are ideally reached we should see a wave-ii/b bounce, before a wave-iii/c takes hold. Note that simple symmetry downside breakdown targets SPX2710, which would fit a 1.618x extension of wave-i/a for a complete wave-iii/c. So once this first initiation move is complete and the oversold bounce to ideally around resistance 2840-2850 takes hold I am getting ready for the next larger move down.

Many will point to sentiment and other washed out indicators to say the markets "must rally", but remember that crashes happen when markets are already oversold and sentiment already is Bearish . Nobody panic sells when everybody is Bullish . It's simple the reverse of a Bull market, where strong upside momentum and very overbought readings and Bullish sentiment can continue for a long time. So that is why I see sentiment etc as tertiary indicators. Price comes first: primary. Market breadth second: secondary (because it shows the markets strength/weakness from "under the hood"). Everything else is IMHO tertiary.

Lastly, note that I label the larger waves as i/a, 2/b etc, because we can never know before hand if a move -even if 5 waves- in either direction is the start of a new impulse (i,ii, etc) or part of a correction (a,b,c) where wave a and c are also 5 waves... So to prevent hubris, always label them as both initially until the market eventually tells you which it is. Yes even c-waves can be made up of three waves, and are not always and necessarily comprised of five waves!

Trade safe!
Comment: *correction "oversold bounce to ideally around resistance 2885 takes hold I am getting ready for the next larger move down. "
See, here, according to notes in your chart, you are expecting a breakdown through support at 4th wave within the channel. According to Elliott Wave Theory, we need to complete a 5th wave before expecting it.
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