Friday, January 15, 2016

MTU Weekend Ed. - Bull/Bear Possibilities (1/15/16)

The breach of the August and September lows in the SP500 cash index today (which was old news in smaller cap indexes) opens up several interesting possibilities, all with potentially large swings.   Near term, the market is oversold and bounces can show up any time.  See Chart 1A and Chart 1B and note the interesting Fib-division of a potential flat/123 based on the green label. 

Triangle Failure  - cash index failing, futures holding
The triangle we've been tracking in Chart 2A obviously was never meant to exist, given today's breach of the August low in the cash market.

Interestingly, the August low in futures is still holding (Chart 2B).  So if a sustainable upswing develops soon, we might be able to tolerate a minor breach of the August low in the cash market and continue to track this "triangle".  One simply labels it an (w)-(x)-(y) in retrospect.

In case of a continued slide, since this is a 250-350 point "triangle", the projected drop, even if it is still a part of the proposed wave [4], could easily retest the 2000-2007 trendline or the 2007 top. See Chart 3.  


Triangle Alive - not so fast, how about this triangle?
The complex leg of the proposed triangle may be wave [c] instead of wave [b]. Wave [d]-up and [e]-down over an election year? See Chart 4. Please note the positive divergence between RSI and price.  This triangle would fail if the October 2014 low failed to hold.

Nah,you got the top wrong
It does make more sense now than before to count from the May top in SP500, given today's breach of the Aug/Sep lows.  We may have simple ABC decline (Chart 5).  Subdivisions lower could target a Fib-0.382 or Fib-0.5 correction of 2011-2015 advance, which is around 1730 and 1605 respectively.

Don't discount this EDT or LDT

The sell-off in SP500 from its nominal high looks like a diagonal triangle (Chart 6). January's even-bomb driven, gap-ridden waterfall decline does have the personality of a E-wav plunge.

Is this a terminal wave (c) of an odd looking flat (Chart 6-blue) or an LDT wave [1] or [A] (Chart 6-black)?  In either case, a sharp upswing toward 2100 is to follow once the diagonal triangle concludes.