I mentioned SPX 1852 would be important this week and I mentioned February should be volatile both down and up, but I didn't know SPX would trade in nearly a 2% range while ending up at SPX 1852 for 2 closes in a row. Today was THE lowest close of CY2016 falling below the January SPX 1859 close from 3 weeks ago. The setup seems similar to Jan 4th/5th when SPX closed at 2013 and 2017 on back-to-back days about 3 weeks after bouncing from the same closing levels at SPX 2012/2006. You probably know SPX fell 10 more days to 1812 from there. The current situation is starting from a more oversold and more pessimistic base.
If SPX now chooses to take out 1828/1812, is my target still 1750-1800 leaning closer to 1750? The short answer is yes. Let's take a look at new calculations.
1763=1882-(1947-1828)
1783=1882-(1927-1828)
1760=1882-[(1947-1872)*1.62)
If I use a 1.62x multiple for the first 2 equations, I end up with targets at 1700-1730, and if I use a 1x multiple for the last equation, I end up with a target at 1807. Regardless, when you combine my previous calculated targets at SPX 1750-1800 focused with the new targets at 1760-1783 and the OEW pivot at 1779, I do think there is a potential bulls-eye at 1770 +/-. SPX 1770ish could possibly be reached Thursday or Friday morning, but next week is looking more likely.
SPX still has the technical opportunity to triangulate further between 1812 and 1950 which would allow it to approach max option pain (currently 1950 but likely to drop) near Friday February 19th. But, the System and trend are still bearish, and most indications favor a lower low. So, I still think either SPX drops fiercely for 1-2 days to 1750-1800 and then bounces back to max option pain next Friday or drops more choppily to the same area near Friday Feb 19. VIX and TRIN have still not spiked, and I am still waiting for most of the bottom markers mentioned earlier this week. Good fortune.
No comments:
Post a Comment