Officially the SPX and DOW confirmed sell/short signals today. However, per my post earlier today, I elected to wait to see if the equities would rally a bit into the close. Since, they did and in doing so printed bullish reversal candles, I elected a wait and see attitude regarding the remaining equity trades especially with the portfolio already relatively hedged. Should the equities gap down tomorrow, then I’ll exit the longs for shorts, however should it open green I’ll hold the SPX, DOW and Financial longs and re-evaluate the shorts.
The favorite bullish count is shown below. Fourth waves typically seek the 4th wave of lesser degree. And, thus it makes since that intermediate wave (4) either bottomed or is bottoming in the area of 2033, which was the minor wave 4 of intermediate wave (3) low. The SPX regained the neckline of the bearish head and shoulders before the close, which was a large contributing factor to my holding the remaining equity longs.I’ve been showing this count on the daily chart for some time. From a big picture perspective we finally have a pullback that “looks” like an intermediate wave. From here, we should see five waves up to conclude the bull market, if this count is correct of course.As you can see on the daily charts for the leading equity indexes, four of the indexes printed bullish reversal hammer candles while bouncing off the lower Bollinger Band.
The bearish count needs follow through tomorrow. The SPX briefly took out the neckline of the bearish head and shoulders, but couldn’t defend it into the close. The bears need an impulsive move down tomorrow or Monday.