Elliott Wave: Week of 10/8/18 - Why current decline helps bulls

SPCFD:SPX   S&P 500 Index
Publishing early this week as I expect to be completely out of pocket for a few days, maybe the whole week. Is October scary, as I asked last week? Not much so far (but is just a little).

A pullback was expected, though it surpassed what I thought would be support in the 2880-2890 area. Respecting the potential for a drop to 50d sma (or in my case 55d ema ) is always prudent, which is where the bounce occurred at the week's depth on Friday. So what next?

The speed of the decline suggests sideways movement ahead. Other technical indicators ( fractal , lower degree EW waves, comparison to Small Caps and Tech indices, A/D data, etc.) are consistent with expectations for an upward technical bounce, suggesting caution before heading higher.

As anticipated last week, I layered in positions starting with Thursday's drop , and added more on Friday. They're primarily short term based on the above expectations. Comfort zone is still with primary trend being up.
Big RSI divergence on weekly.
+1 Reply
Do you see a further drop? I am seeing a low around 2840 before we continue up for a new high
iamthewolf cguthrie922
@cguthrie922, I'd be surprised if that happened immediately. Not my primary read, but certainly not impossible. It would put index at the lower channel line (yellow).
Thanks for posting. Might be in for a few more bearish days but starting to take positions as well. Could test lower channel support in 2840s if panic selling starts, would set stage for strong up surge. Good luck!
iamthewolf DaddySawbucks
@DaddySawbucks, Maybe, but I expect a move up first, even if slight. Plenty of risk-off positioning due to weekend risk. An unwind of that would blunt a move down. See my note above about 2840.
@iamthewolf, Right on it is oversold atm, but I still expect to see 2840 later on next week before it's over. Thanks for the post!
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