Current SPX Position: Short at 1704.38
Next Action: Stop and go long at 1707.84
System Score: 5=Neutral=Trend Score + Turn Score=10-5
Proposed New Score: 54%=Neutral=Trend Score + Turn Score=48+6
The Score remains neutral. The System remains short. The bears have already inflicted some technical damage, but getting much below the 20dSMA (just below 1690) would really open the door to a failed rally and larger drop. The fall from 1710 would potentially look like 5 waves if SPX retests or breaks below 1693 today. If that occurs, a short failed wave 2/B rally back to 1700-1704 would be the likeliest reaction. SPX has done exactly what bears needed so far by taking a couple weeks to build more negative divergences around 1700 allowing moving averages and other technicals to setup for a larger drop. But, bears must seal the deal and while 1672/1674 is important in EW count elimination terms, I think 1682-1686 realistically ends a nested 1-2 (of 5) scenario. Those areas will probably hold short-term awaiting a show of strength from bears after the next failed rally. Good fortune.
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