Stock Likely Bearish Into April 2018???

I have evaluated currently active price cycle in SPY and currently, the dominate cycles indicate downward pressure until late February at which point the next bounce into March is currently indicated.

If the market is to remain in a uptrend, this period could simply be a flattening or chop.  But if a legit correction is to take place, then some notable downside could occur. 

Again, if long in a market, keeping part of a position with a trailing type stop is a way to stay with the trend instead of getting caught in the all-in or all-out trap.

It is apparent that "suckers" have recently bought into the market and the sentiment on many measures is at an historic lopsided bullish skew.  This has the potential for the recent "easy money" period of the last 2 months to be wiped out and punish/bankrupt the suckers in the way that the market collectively always seems to do.

Based on currently active market price cycles, the next very strong downward phase of cycles, currently projects from mid March into mid April.  So it seem possible that SPY has either already topped and is in process of the first real correction since the Nov 16 low, or SPY may manage a higher high in March at which point a more glaring bearish divergence would be set and could be another potential rally high.

I will re-link a recent post I made about 3 weeks ago which showed the put/call ratio "imbalance" present at the time and which produced large period of decline/correction over the ensuing months.  The previous instances would fit well with the idea of a larger ongoing correction or sell off into April or beyond.

Also make note that the move down off the recent high is the largest and fastest decline which has occurred since Nov 2016.  The move up since Nov 2016 is in an elite class of lengthy legs up without notable correction.  So it is "due" at any time for a correction.

After a period of trending advance, a larger and faster or larger and more time consuming correction is a Gann concept indicating an "over balancing" or change in character which is the objective price indication of a trend change or correction.  It is confirming evidence which would guide the analyst to look how past similar market periods progressed. 

In this case, assuming that coming weeks demonstrate some further decline, one of the key points will be to determine whether the character (%, rate, time, etc) of the decline fits better as a correction in a bullish trend, or does it better match the historical initial sell offs in a bear market.



Pete