I was wrong about the end of the 7+ day "boring" SPX 1994-2004 range into September 7th. Yes, we've traveled a little above and below it but not more than 1% and not for long. Here we are again as of September 24th at 3PM.
Having said that, the spring is coiled tight. I know you've all heard the potential crash setups in recent days. Significant breadth divergences are the latest ones to join the bear parade along with potential intermediate-term climaxes in QE, cycles, IPOs and citizen-squashing. Previously, we had bearish building divergences in RSI, spending, risk and small caps along with bull market length, historical behavior after previous breakouts above old bull market highs and entrance into the more bearish Sep/Oct seasonality to name a few.
Like a triangle pattern, all of that may finally be reaching an apex and, like a developing-world commuter train, the load may finally be too much to handle the small twists and turns without throwing everyone off and possibly crashing. We have the potential conclusion of a multi-year EW pattern and possible EDT with a large correction that has initially bounced off the 50dSMA and is now testing the underside of the 20dSMA area after a 50-62% Fib retracement in the Dow/SPX. There was a BOW day a couple days ago that supported today's SPX bounce, but now that is expiring and another SOS day is emerging with some indicator relief, so the opportunity is there for bears.
After a lot of reading, I tend to like the SPX 1935 +/- 10 target area for this initial downtrend for various reasons including certain moving averages, trend lines, EW, typical first downtrend length etc. I've also noticed that almost all downtrends of any consequence in the last couple years have done their primary damage in 6+/- trading days after the top...sometimes less with the 5th or 6th day being a bottom retest. Today is day 3. Days 5,6 and 7 fall on Fri/Mon/Tues. Something like 2000-->1940-->1960-->1935 into next week is very possible. Of course, a breakout back above 2019 would change things. Until then, I'm loading up on shorts at 1999+. Good fortune.
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