S&P fell lower yesterday towards our first target of 1620 and did not break Monday’s low. The weakness is evident as prices cannot break the and lower highs sequence. The 61.8% Fibonacci retracement and the downward sloping trend line posed significant resistance yesterday and that is why we went short at 1645. Another test of 1620 was expected.
S&P was rejected again at resistance yesterday and went straight down to test support. Eventually we believe that prices are going to fall past 1620 and test the 1600-10 level. Trend remains down and we believe that we are going to see those levels soon.
The bigger picture in S&P remains unchanged. The decline has an overlapping form and we believe that it is a correction and not an impulsive move. If we see any sign of impulsiveness then we will update our wave count and view accordingly. We believe that when panic selling pushes towards 1600, that is when we will see the bottom of the correction that started from 1687 where we closed our long positions.
As always, thank you for taking the time to read my new post.