SO I have been hearing a lot about the long awaited (and very past due) market correction that analysts have been anticipating since August. SO lets assume they are correct and that there will be a large market correction in October. What can the charts help predict. Well first of all, a true ICL needs to break the low of the last DCL. Since it appears we have made a double 3, 4 wave count, I believe that we would have to correct at least below that red zone. And with a decent correction, I just don't believe that we will break the very long term black uptrend line which was established at the 2009 bottom. So I measured the small wave count for what I believe is a wave 5 and as you can see, a full 100% move up of wave 1 would take wave 5 to 2552 range. But that would only account for an approximate 8% correction to that black trend line. (being that we are so so late for the ICL correction, I am expecting a swift correction to last no more than a couple weeks). But if we are to have that 10% correction that they have been talking about then that would mean that the SP500 would have to climb just a bit higher to closer to 2600.
I am actually kind of hoping for that correction because that would be a great and easy buy the dip opportunity before we get into the euphoric bubble phase of this market rally. GL
By the way, a full 10% correction would mean that the sp500 would have to reach 2602. And based on the current trajectory of price movement, that wouldn't happen until the very end of October or early November. Otherwise, an 8% correction could start next week as that is the estimate for price to reach that 2550 zone.
Let us also not forget about the very large bearish divergence that exists currently on the RSI. IT also exist on the weekly RSI.
I am actually kind of hoping for that correction because that would be a great and easy buy the dip opportunity before we get into the euphoric bubble phase of this market rally. GL
By the way, a full 10% correction would mean that the sp500 would have to reach 2602. And based on the current trajectory of price movement, that wouldn't happen until the very end of October or early November. Otherwise, an 8% correction could start next week as that is the estimate for price to reach that 2550 zone.
Let us also not forget about the very large bearish divergence that exists currently on the RSI. IT also exist on the weekly RSI.
Comment:
So we reached 2552 today and Also the top of what I believe is the channel. And then I saw that the RSI is very overbought. And then I read that on Monday, Catalonia in Spain is going to possibly declare their independence from Spain. So I decided to take a chance and I bought Tvix today. If October is really going to be the month when we have that good-sized market correction then today looks like a good day to roll the dice.... at least until After Monday. Oh another thing, even though we push higher today in the markets, the volume was very light. Volume drying up as the price goes up may be a sign that we are finishing the end of the 5th Wave.
Comment:
So we had a little gap down this morning but really not much movement at this point. And the vix is slowly climbing. Too early to say but it appears that we may have a top and will start the drop. Gold also appears to have bottomed. Let's see what happens with that vote on Monday. The timing and wave count fits well.
Comment:
In order for a intermediate cycle to be considered, it first has to break the daily cycle uptrend line which is the bottom of the blue channel and is coincidently where the 100 DMA is located. The next thing for an ICL is that it should usually drop below the last Daily cycle low which is below that red zone which should also be where the 200 DMA should be at that point. I added the 50 Wk MA in there as well. I think we can reach that yellow zone if this is the correction that we have been waiting for. The results for the Catalonia referendum should be in within 24 - 48 hours after the polls close on Monday. I believe that the Spanish government is planning on trying to physically stop the vote from occurring. The vote looks like it is going to pass. That should really rattle the markets worse than the Brexit. The EU is going to crumble. There will be more bloodshed over this.
If we make it into the yellow box, I really really believe that that would be a very safe long term trade for the bullish argument. SVXY or XIV would be an easy buy in for the bubble phase of the market. I may do that instead of Jnug for a short while.....just until we can see what the gold gods want to finally reveal.
If we make it into the yellow box, I really really believe that that would be a very safe long term trade for the bullish argument. SVXY or XIV would be an easy buy in for the bubble phase of the market. I may do that instead of Jnug for a short while.....just until we can see what the gold gods want to finally reveal.
Comment:
I got out of my TVIX trade today when I heard the news that the Catalonia Leader decided not to declare independence today. So that being said, I think we are simply going to trade sideways to slightly down and probably make a run to 2600. At that point, I will probably try again with the VIX.