Well that wasn’t pretty. We had a large downtrending bar in the cash S&P500 yesterday. The price pulse that began on Wednesday morning ended at the high Wednesday afternoon. The latest price pulse is down and has caused the 1552.76 high to become a Change-In-Trend (CIT) point. I was stopped out of the long SPY trade in my blog related Investopedia account. With that loss the annual return is now down to a positive 2.9%.
After reading the blog yesterday my wife asked “So tell me again why you went long at the end of five waves up?” I won’t go into the sordid details of how that conversation went, but suffice it to say that I wasn’t positive that the count was correct and certainly thought any decline would hold the 1530 area.
So what now? From the Frost and Prechter text “Elliott Wave Principle”, “Second waves often retrace so much of wave one that most of the profits gained up to that time are eroded away by the time it ends … at this point investors are thoroughly convinced that the bear market is back to stay.” If we are now in wave ii” (see chart) I would think that the 1503 level would hold (Fibonacci retrace level and long term moving average support). 1489 must hold or I am back to the drawing board.
Then there is this quote from yesterday’s blog “The only way I can be bearish over the short-term (next few days) is to count the move from the 10/24 low as a completed five wave impulse move. That would imply a pullback over the next two to three days. Even if this were to occur I still envision a move to new highs afterwards.” Believe it or not my work still has high odds on a large upward move from the low we make here.
Bottom line: The bulls must make a stand and hold 1489. A look at the monthly and weekly charts over the weekend. Stay safe.
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