As posted last week in our posts in twitter, after the 5 waves down in S&P we were expecting a corrective upward recovery. So what is the most possible market direction starting this week? It has been noted several times in several posts before that the market needs a good sizeable correction towards 1470 and we believe it has started. The recent highs are expected not to be breached. After Friday’s upward corrective movement that has completed 3 waves (typical wave theory correction), the markets are expected to fall to new lows.
DOW as shown above has retraced a bit above the typical 61.8% retracement. Resistance is found at the previous wave ii at 14010-14050 area. The analogy is the same for S&P, as shown below.
S&P hasn’t reached the 61.8% retracement but also completed an upward 3 wave correction. For our wave counts for both indices will be confirmed bearish if prices don’t move past the start of wave i (recent highs) and if prices start a new downward move that breaks recent lows. For more help trading these indices become a member subscribing in our Premium Services page.
As always, thank you for taking the time to catch up on my thinking.