The S&P 500 is in trouble here… and a short in $ES #F looks to be just what the Dr. ordered. Multiple confluences are aligning around the 1957 level including; measured move target, VPOC low point, 1.618% Fibonacci extension (1960) of 2106-2032, the yearly pivot, and an hourly Wave 5 target zone extension.
2020 should offer some support for a bounce/retest before taking aim at 1957. It’s my opinion that could be it for the selloff — total peak to trough of around 7.5%. The next targets lower (should the slide continue) take aim at the 1900 handle (1902 specifically) and finally 1833 – 1826 for a near 14% total correction. If we stop here, that would be more than enough to put in a Major Wave 4 and Major Wave 5 up would then begin.
However, should we continue dropping the likelihood that the entire move off the 2009 low is a giant, “ABC” corrective wave. This is significant because an ABC structure only happens as a correction to the major trend direction. In this case, that would mean the next major 5 wave series should be down — something I’ve never seen in an index like $SPX in modern times. Even in 2008-2009, the major count was an ABC 3-wave structure; meaning the longstanding bull market stretching from at least the Great Depression was intact. I’m afraid that today’s ABC to new highs could mean that this nearly 100 year old bull market is over. Add to that we have a Fibonacci crash extension coming due in July – August 2015 (only 1 month vs. 15 months in 2007-2009) that is eerily reminiscent of the crash of 1987. But, before we get too carried away, t’s important to note that the ABC will not be confirmed until we breach 1400 $SPX before reaching another new high. Technically, around 1370 $SPX is the final level that must be held where we’re still conceivably in a Major Wave 4.
I really have no idea what argument deserves bias… My gut says we put in a Major Wave 5 to equal/new highs in the next year. Why? As bearish as I can be sometimes, I find the idea of “the end of the bull market” absolutely terrifying. New highs will be critical off the Major Wave 4, otherwise the count will remain an ABC final rally series with Major Wave 4 becoming Major Wave 1 Down with Wave 2 at a lower peak. Something to keep in mind also is the likelihood of a new round of QE in a correction > 10%. There’s a huge probability this will happen, in my opinion. Whether or not it matters to the market (or if QE matters at all) we will not know until we get there.
Good luck out there.