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Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

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Daily Analysis

Today, since I don't have much to add new from what I have been posting in the last few days, I prefer to summarize my view regarding my preferred scenario, leaving the details for the weekend update.

I maintain, depending upon the time frame, the following bias for SPX:

  • Long-Term: I am bearish because my preferred count calls for a Double ZZ from the 2000 Top, and now we are in the wave (X) up that will be followed by the second ZZ down.


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  • Intermediate-Term: I am bullish because my preferred count assumes that the wave (X) is not completed yet.


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  • Short-Term: I am bearish because, in my opinion, on April 2 price has established a short-term top.


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The internal structure, of the current pullback is clearly corrective, but most likely not over.

We have to be "astute" since price is giving us a major statement, as the pattern so far does not suggest extremely bearish implications.

But we have a problem in order to have a confident location of price within the EWP. Since corrective patterns can morph easily.

For the time being I am assuming that price is now involved in tracing either the wave (C) of a larger Zig Zag, which would imply the resumption of more down side shortly (once a relief bounce is completed), or a more complex Double ZZ, which implies a larger rebound.

I am considering the 50 d MA = 1386 as the line in the sand between this two options. Given the weakness seen so far it seems more likely the wave (2) option with a target in the range 1375-1378.

Regarding the potential target, in the weekly chart below I have highlighted the range 1300-1285.

We can also see that the 1340 area is the last obstacle that bears have to break in order to kick off the expected move towards the target box.

  • Immediate-Term: I am bullish because:

Short-term momentum indicators are oversold and CPCE is extremely high.

And the EUR is also oversold. Like for the SPX's short-term scenario I expect more down side for this pair but after a relief bounce. The Gap at 1.3089 should not be closed if the EWP that I am following is the correct one.


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To sum up:

  • I expect a relief bounce due to oversold readings and excessive bearish sentiment (measured by CPCE which is a useful contrarian short term indicator).
  • Once the relief bounce is over I am expecting more down side, which will be confirmed by the loss of the 1343 pivot support area.
  • The overall pattern suggests that price is involved in a correction with a potential target in the range 1300-1285. Once it is over, it will reopen the door for the resumption of the intermediate up trend.

Have a great weekend.

 

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