Well with all the up and down today we managed to stay with in both the rising blue channel and the larger falling green channel. So which way now?
We did not break back in to the wedge on the VIX:SPX.
CPCI:CPCE 30ma is about to cross the 50ma. This has been really bad. Note the previous times it has crossed.
Yesterday a bullish engulfing candlestick pattern formed. This is a bullish reversal pattern. It needed an up day to confirm. But instead we got a down day that in fact formed a bearish dark cloud cover pattern. We need a down day tomorrow to confirm. I cleaned up the daily candlestick chart and drew a true channel (blue). You can see while we were down today we only traveled to the bottom part of the blue channel, we did not break down out of it. Also note that we held the Long term channel (green).So do we bounce up or break down?
VIX:SPX opened outside the wedge and managed to close outside the wedge today. The MACD histo looks like it could be starting to trend up. From this chart I would think we would break down out of the channel on the SPY chart.
Hey the CPCI:CPCE is starting to curl nicely, now we need the 30ma to cross the 50ma going down to really be able to pile in to the position.
The VIX:SPX moved back into the falling wedge. I really expected the upper trend line to be support but we closed well below it. The MACD has not crossed over so there is a chance it might recover tomorrow. If not it will probably make another journey to the lower trend line.
Which is what we also see here. SPY was able to jump back in to the channel it had fallen out of and even retested prior to the holiday. Today's massive move up was able to break through that resistance and finish inside the rising channel (black). Also note that while it was a huge move up, it still stayed within the larger green channel that makes up the 5 waves for what I favor to be the current e wave count.
In the VERY short term I am looking at SPY hitting 88 some time on Monday. 88 will be very strong support as it was resistance for the double top in jan/feb. After that I expect a bounce up to maybe 89 followed by an 87 target in the short term. In other words I expect it to be fairly choppy for awhile as we drift lower.
The moves on the VIX:SPX have been sharp and violent. I expect us to slow down a bit perhaps move down or sideways before we make the next run up.
A reminder that we very well can be in P1. Wave (4) hit the channel exactly and bounced off. It also made it to the same region has the wave 4 of wave (3). Note that the rise has been on declining volume on the dailies.
