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Advanced Technical Analysis

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Note: the following analysis is formulated as an assimilation of Fibonacci, DeMark, Elliott Wave and other technical indicators. It is offered as education and not intended as advice in any way.

Summary:

Just a brief update this morning to detail where we are in the developing bearish wave count described in yesterday's note. Specifically, yesterday's price action looks to be part of or the entire internal wave iv corrective bounce we were looking for in the Monday note. This implies that once this bounce ends (perhaps today) another new low beneath the 8/6 (SPX and INDU) and 8/9 (NDX) lows would complete the first "5" wave move down of the developing, highly bearish "third of a third" decline implied by the most probable wave count. And once that first "5" wave move off the 7/30 peaks was complete, we could then expect a healthy bounce for a few days before the expected intense selling begins anew. That specific point, that few days bounce, should then present the beginning of a major down trend if the bearish count is correct: I'll be able to highlight important resistance points as the next few sessions unfold.

For now then, patience remains a virtue: if the very bearish wave count is correct, we could get the beginning of the decline we're looking for late this week or early next. We still want to make clear however that, however improbable given the technicals and the wave counts, a bullish interpretation is possible. If so, the bounce we expect (once this current "5" waves down from 7/30 is complete) will be unquestionably strong and will strongly suggest our bearish count is wrong. As a result, the technical view then is quite binary: a bounce from whatever 5th wave low is struck this week should be weak and overlapping (confirming the very bearish interpretation) or it should be unmistakably strong (confirming the bullish alternate count). Stay tuned.

No positions in stocks mentioned.

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