Prices worked a bit lower and touched/tested the clear trendline – which is a sort of neckline – that has developed on every index. Therefore, if prices are going to bounce yet again, it’ll probably be from here. If the market loses this neckline, prices are going to test (and eventually exceed) the June wave (1) low.
Therefore, the squiggles support two bounce options within the realm of wave counts from here. Pink pathing is for Minuette (ii) a subwave of [iii] of 1 down. Green pathing will close the huge open chart SPX gap in an upward 3-3-5 expanded flat Minute [ii]. This will be based on some sort of “good news” event (maybe the railroad strike is avoided). Or maybe no news at all which is how waves work anyways.
The super bearish option is that overnight futures drop solidly lower through the neckline and the open tomorrow is a bloodbath and we begin to approach the June lows with market losses exceeding the minus 1300 Dow points of the other day. Wouldn’t that be gloriously fun? Railroaders going on for sure strike Friday would be the “news excuse”.
From a mechanical/sentimental market standpoint, certainly prices are much closer to the June low than the Nov/Jan tops. People’s mood is shifting, and they need the cash, inflation is rampant, credit card interest rates are skyrocketing. The option of draining 401k’s and such after seeing them lose a lot of money to wave (1) June low, recovering a lot in the recent (2) high, and then down, up and now down again…at what point do the prudent (and broke) pull their money out of the market in a beginning panic fear? (Probably not many at this point in time)
Regardless the overnight futures may or may not control what happens with this neckline. Does it break in glorious overnight hard down future action with a panic open? Black Friday?
Or will they jerk it up with the algos on some perceived “good news” event? Should be fun either way. It just seems we are at a temporary inflection point and I’m glad I am a spectator to it all.
