Yesterday due to the large gap up of UPRO I missed the suggested bullish setup. Today I will have to leave early for a one day business trip hence I will not seek anymore a long entry, anyway since my preferred scenario calls for a short lived oversold rebound with a potential target for SPX in the range 1812- 1815 I am already doing some homework in choosing a candidate to short in addition to SPX. So far I decided to monitor XLF since it has unfolded a similar pattern with a 3-wave down leg, which should belong to a potential larger Zig Zag down.
If price overcomes, in the next couple of days, the 10 dma, which is located at 21.40, the "oversold" rebound could extend, as well as SPX, towards the 50 dma, which stands at 21.54. Since in my opinion we have a very sensitive equity market (Vulnerable to risk aversion) and overweight equity positions, the odds of another large down leg are large. If this is the case the next down leg could reach the 200 dma at 20.35
Therefore I will keep a close eye on FAZ. If the script goes as planned, it should now unfolding a wave (B) pullback within a Zig Zag higher from the January 15 low. If XLF is able to approach its 50 dma then most likely the wave (B) of FAZ should have further room to the downside towards the 0.618 retracement of the previous up leg and horizontal support in the range of 22.06