We had a downtrending day in the cash s&P500 on Thursday. The downward price pulse from the high of 1492.14 continues as we retest the low set Monday at 1438.53. Volume continued to shrink yesterday but is now giving a different message than it has for the past few days. We now have the same price/volume relationship we had on Tuesday. Price is moving easily but the volume has decreased. Wednesday morning I wrote that “It is a warning sign that the prior trend will resume unless volume comes into the market”. This is what happened as we reversed to the downside Wednesday. Now, if volume doesn’t come in to the market we may reverse to the upside.
Since I continue to believe the retest will be successful and that the low is in, I will be going long the SPY on any move above yesterday’s high unless we get a new low first. I think we have an excellent risk/reward situation here. My initial stop will be right beneath Monday’s low.
If we do get a new low it will most likely be associated with the wave count presented in today’s chart. It shows that one more push lower is due in a fifth wave. Note that in this count waves iv” and i” do not overlap and that waves ii” (expanded flat) and iv” (zigzag) alternate.
No comments:
Post a Comment