The carnage is far from over. From a technical perspective, the weekly on SPX appears to be giving us a massive diamond top. The fundamental backdrop isn't pretty either, with inflation being massively understated. The fed will eventually have to drop the hammer, creating panic within equities. Without involving fundamentals, look how similar this distribution...
IWM rejected a crucial AVWAP handoff and appears to be giving us a low risk short entry. Notice how price action gave us a repetition of the previous distribution pattern before moving to the downside. That quick fake above the handoff should add fuel to the flame.
Market participants tend to repeat their actions, and a skilled technician will recognize these repetitions. Notice this pattern of decline, to an island reversal, retest of the pivot forming a secondary base. Should market conditions cooperate, we should see this repetition follow through.
Bottoming is a process. The last 2 years has conditioned many to "buy the dip" as pullbacks were quickly scooped up as buying opportunities. We reached greater than 5% penetration of the 100 MA during this correction, so history tells us we won't have the V-Shaped recovery many are hoping for. We likely have at least 1 more down leg before a real bottom occurs.
Likely scenario we see with SPY. We haven't quite seen a true exhaustion move quite yet. I'm expecting some kind of rally attempt at the March AVWAP, then one last exhaustion move down to Oct 20' AVWAP. I want to see some true capitulation before we bottom out.
Remember, a bounce does not indicate a reversal, and things don't go down in a straight line. A sharp decline usually indicates a corrective wave, so always look for a short pull to the upside for potential short entries.
Entered a sizeable TSM position upon true break of this accumulation zone. This is also meant to be an education study of how to properly use moving averages. Many traders use moving average crossovers as buy and sell signals. While a crossover can potentially signal the start of an uptrend, they more often signal a non trending accumulation or distribution...
Clear accumulation to markup indicated by bullish stacked MA's. Ideal entry would be at the AVWAP from ATH, is showing a clear pattern of higher lows on the right side of a inverse head and shoulders pattern. Notice how each inverse head and shoulder basing pattern is made up of smaller inverse head and shoulders.
Massive descending triangle with a shorter term head and shoulders. Gave us a pullback to the upside, but expect a continuation approximately the same length of wave A to come in. Support could be found at the IPO AVWAP.