Market Update

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Here is a possible pattern scenario on the S&P 500. The recent move down since the beginning of June explosively retraced the prior small wave, which itself related well to the prior waves. But the move down became extended suggesting a larger pattern beginning. From a price logic standpoint this suggests that a new downward pattern is now unfolding, or possibly that an expanding downward pattern is ending, in which case the move up will likely be less explosive. The blue rectangles are the same time duration, so if any upward move from here retraces the recent move down slower than it happened, then the balance of power is still down.

The 1295-1300 is the first overhead resistance on the chart. Today was the 2nd day of a rally attempt in a market correction. IBD says that a 1.7% or greater advance on increasing volume from the prior day, should occur at day 4 or after to confirm a possible new advance. So keep an eye out for that here. After looking at many charts recently, I am leaning toward a continued correction. There are some base failures and high profile stocks that seem likely to decline. That should continue adding pressure on stocks.

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This is the CRB index. It seems very likely to me that the May low will be broken based off this upward consolidation after an explosive downward move from the highs. If it does break the May low, then based off historical tendencies, we are likely in a bear market which should have a long way to go yet.

Coffee looks like a good short opportunity and there is an etf, JO, that could be used. I may post a trade on that soon.