Yesterday’s market maintained trade within the acceptable retrace range for a 2nd wave correction, however the decline was a bit stronger than I anticipated. What happens over the next couple sessions will hopefully go a long way toward narrowing down some potentials.
The ending diagonal count I proposed a couple days ago is still alive and well, and if this is unfolding, it will be extremely difficult to anticipate until it matures a bit. (Chart below.)
The Happy Bull count has tested its limits with the strength of yesterday’s decline, but until the prior swing low is taken out, it remains feasable. It’s also possible that this is still part of the larger red wave (2), as shown below.
And it also remains on the table that ALL OF wave (v) completed at the recent high. It’s a bit of watch and wait right now — so at the moment, paying attention to the support and resistance lines shown on the chart might be of more value.
The Angry Bear count would look something like this (below):
There are some bigger picture points to bring up, one of which is the NYA, which has bumped its head on a few long-term resistance levels, which could create problems for the broader rally.
The NYA has also formed a passable short term triangle, as has the Dow. The lines drawn in on the NYA (below) aren’t intended to be a prediction, merely an illustration of how a triangle can over-throw a boundary and then reverse.
BKX also has a triangle, and this one looks very trade-able.
Next is silver, which has so far retraced back to an almost-perfect retest of the presumed diagonal.
And RUT continues to gyrate around an important pivot level.
In conclusion, yesterday’s action left a lot of gray areas. It may have been part of a normal shakedown before the market moves higher, or it could be the start of something more bearish (or at least something less bullish). There are a few patterns outlined above which are worth watching for potential clues. Trade safe.