Thursday Update

Today was a strong day for the bears. Key technical levels were taken out to the downside and now the last of the important support levels are being tested, should current levels fall, then the 78.6% retracement is the final hope for the bulls. If the bullish count is correct, then this is exactly the bearish sentiment that one would expect from a second wave. The non-farm payroll numbers tomorrow will be a catalyst for volatility. The bears are close to winning the day. The Alphahorn Swing System has confirmed sell/short Signals for Precious Metals, Miners, Biotech, DOW, Energy, Financials, Nasdaq, Real Estate, the Russell, and the SPX. On further weakness, the Portfolio will look to exit longs. I’ll post tomorrow should the Portfolio make any trades.

The bullish count is that minute wave [ii] of minor wave 3 concluded today at the 61.8% retracement level of the minute wave [i] leg up. This is the second retest of the trend line off that previously served as resistance for bear market bounces during the pullback and is now providing support (similar to the BTC scenario described in my earlier post). The bullish count becomes invalid below the minor wave 2 low of 3764.

The bearish count looks really good after today. Thus far the SPX has traced out a three wave move up off its low, the bulls see it as a 1,2,[i] start, the bears as an abc correction. Per the bearish count, minor wave C has traced out a minute waves [i], [ii] start and now minute wave [iii] is due to make a significant impulsive move down taking out the minor wave A low. Until the Critical Bullish Level highlighted above on the SPY chart is taken out (4325 SPX), this bearish count remains very much alive. This count is looking for a minor wave B of intermediate wave (Y) high. Wave B should now be complete, and if so, then minor wave C should impulse down through the minor wave A low. For now the SPX continues to find support on the volume point of control. The interesting thing about this count is that the minor wave C=A target sits nicely in the 61.8-65% retracement pocket. This count is invalidated with a trade above the intermediate wave (X) high.

About alphahorn

I received an MBA from Columbia University’s Graduate School of Business in New York and am a Wall Street veteran. I’ve worked for a number of investment banks including Smith Barney and First Boston/C S First Boston in New York. Over the years, I have developed my own Proprietary Swing System and I combine that System with my own Elliott Wave Analysis to trade.
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