TRIN was 4.97 yesterday. Most such high readings are followed by a bottom within a few hours or days, but they usually lead to lower prices first or a retest of the low. Some do form bottoms immediately. December 10th as an example had TRIN>3, rallied briefly the next day and then fell 50+pts for 3 more days below the TRIN low. TRIN was nearly 3 on August 21st before the infamous Monday collapse. TRIN was above 3 on the August 25th close at 1868, rallied for a couple days and now here we are likely retesting the low. So, the high TRIN reading certainly supports a further price drop below 1903, but that drop usually leads to a more sustainable low. That supports my projection for a lower low below 1867 by end of week and then a 1-2+ week rally likely back near 1950-2000.
The last 2 days have also been large BOW days which usually supports SPX revisiting the buy areas (1920-1990). We're seeing a bit of that today although SPX has stopped at 1938 (a 38% Fib retrace of 1993). There is a chance that SPX has further to rally today in an ABC, but, if not, I think it will rally higher into the BOW range after the next bottom.
If SPX 1993-->1903 completed a 5-wave impulse lower, that could be 1of5ofC in my count. If so, the bounce today may be wave 2 and could rally above the 1938 morning high. Once wave 2 is complete, wave 3 is likely to be longer than wave 1 but not necessarily. Currently, w3=w1 gives us a measurement of 1938-100=1838, so once again an estimate of SPX 1828 seems plausible for wave 3 and or wave 5. I'll also add that SPX fell 0.1% lower than Dow yesterday continuing the SPX under-performance. SPX is likewise under-performing so far today. That allows SPX to touch 1828ish if Dow sets a new low at 15341 (annual reversal level) to 15370 (last week's low).
Although I think the scenario for a lower low below 1867 and likely near 1828 is supported by the technical indicators above, I also believe we are in a parabolic decline that will surprise on the downside much like last Mon/Tues. So, a rally from SPX 1828ish back to 2000+ is possible, but what I'm labeling as a an ABCX may actually be a weak 1-2-1-2 or a weak X. We have lines in the sand in case I am wrong, but, until then, I recommend being conservative with any long positions. Good fortune.
S2, have you eliminated the potential for a 8-9 day drop to 1700, or still carrying it as a possibility?
ReplyDeleteYes. An 8-9 day drop is still possible. The stats favor 2-3+ days which would mean a bottom by intra-day Thursday (Friday if we allow margin for error). The TRIN/BOW readings probably added to those odds but they are just odds. The 2011 analogy a lot of people are looking at had 3 high TRIN readings in 7 trading days followed by a strong rally and then a bottom retest. Then, there were lots of high TRIN readings with bounces and retests mixed in. In 2008, there were back-to-back high TRIN readings Nov 5-6 but SPX continued much much lower until another high TRIN reading Nov 19th and then a big bottom on Nov 21. So, 8-9+ days is certainly possible which would be Thu/Fri/Mon next week.
ReplyDeleteThanks, S2. Reason I ask is I've got a fairly important turn date this Fri just after the close, with IT model looking for significantly lower. Then, up to lower high on 22-23 Sep, then big down IAW your parabolas or worse. Re TRIN, today may be analogous to 8/3/11. A lot of traders looking for a pop here towards 2040 so they can bail out of their trades from the 6 months of sideways action this year. Models indicate much lower first this week instead, continuing to trap them all. All that being said, since I started typing this, my ST models are shifting to long if we close at a new intraday high today. GL.
ReplyDeleteWell, that close changed my model outputs significantly. Now indicate up to a lower high in 6 trading days, chop, retest those lower highs by 22-23 Sep, then severe parabolic down as you mentioned. Currently 50% long position from ES 39.50, stop 42.
ReplyDeleteI know two things. VIX 20 gap will be filled. And S&P will rally to 2050. Now, I don't know when! Damn that timing.
ReplyDelete2050 seems too easy for everyone who went long in the previous 6 month sideways action, think lower high around 2020 before resuming downtrend. Not sure about VIX at 20. Sold ES 1968.25, no position.
ReplyDelete