Unfortunately we did not see the bounce off the 442 level as I was hoping. Bears won big yesterday on increasing volume, rsi broke down, and we lost the wave (4) pivot AVWAP... so that primary 3 top is in.
Where are we likely going?
Well we are looking at a wxy correction with the 100 - 161.8 extensions between 438 and 431. We also had the wave iv pivot AVWAP support sitting right at 438 as well. AND we are in the first swing down of the wave Y. NOTE:this correction has to go beneath SPY 435 to be a valid primary 4. If we dont go below the 14.6 extension then that means our primary 3 top wasnt in.
So what does this all mean? This means that we are about to see support kick in and another relief rally, but that is very likely going to get faded and we are going to sell off heading lower. I expect us to rally off the 438 range, likely on Monday if we gap down or head lower. From 438 we should get 3 waves to the upside taking us back up towards the downtrend line. From there the rally is likely going to get sold off and we will see another big flush taking SPY to the less then 435 range.
Where I favor our bottom: I favor this wave 4 bottom to be at the 14.6% retracement (spy 434ish). Why? Because that is right in the middle of our 1-1.618 extensions, and we have our wave 4 AVWAP coming there to meet us.
How to trade this: It will be choppy. Likely best to short any rally to the downtrend line. Close short positions on downtrend breakout. On selloff to the 435 range close shorts for profit. That is a spot to go long. From there we will see another relief rally even if it doesn't get all the way to ATHs.
Where are we likely going?
Well we are looking at a wxy correction with the 100 - 161.8 extensions between 438 and 431. We also had the wave iv pivot AVWAP support sitting right at 438 as well. AND we are in the first swing down of the wave Y. NOTE:this correction has to go beneath SPY 435 to be a valid primary 4. If we dont go below the 14.6 extension then that means our primary 3 top wasnt in.
So what does this all mean? This means that we are about to see support kick in and another relief rally, but that is very likely going to get faded and we are going to sell off heading lower. I expect us to rally off the 438 range, likely on Monday if we gap down or head lower. From 438 we should get 3 waves to the upside taking us back up towards the downtrend line. From there the rally is likely going to get sold off and we will see another big flush taking SPY to the less then 435 range.
Where I favor our bottom: I favor this wave 4 bottom to be at the 14.6% retracement (spy 434ish). Why? Because that is right in the middle of our 1-1.618 extensions, and we have our wave 4 AVWAP coming there to meet us.
How to trade this: It will be choppy. Likely best to short any rally to the downtrend line. Close short positions on downtrend breakout. On selloff to the 435 range close shorts for profit. That is a spot to go long. From there we will see another relief rally even if it doesn't get all the way to ATHs.