SPY Update - Expecting Price to Make Another Move Lower Into April of Beyond

Click on Chart to Enlarge

The above chart is a SPY daily chart.  And back on 2-14-18 I had posted regarding past similar instances of selloffs and rebounds following put/call ratio dual time frame imbalances like we were seeing in January of this year. 

At that time I noted that the subsequent rebounds of the 4 previous noted comparable instances had retraced 50-75% of the initial decline.  And I overlaid the actual % and time gains on this chart as indicated by the lines rising up from the 2-9-18 low.  It is notable that tomorrow will equal the time of the longest rebound out of the previous 4, before the decline began its next move down.  So we may be nearing the time point here where prices could be peaking and another round of hard selling comes in.

The blue box on the chart above represents the range of declines over the next 3 months of the 4 comparable instances following the put/call ratio signal.  The indication here is that we may expect another wave of selling to break the February low.

The cycle analysis of current active cycles indicates upward cycle trends into next week and possibly a bit beyond.  But following that, there is downward cycle activity into mid April or beyond.

Basically at this point I am looking for a risk reward set-up or clear technical divergence to develop to initiate a short/inverse position in SPY or related ETFs.

Another concept that I have discussed many times over the years on the blog is "price logic".  This objectively gauges which direction of market price action is stronger/weaker and infers the direction of the next "strong" market move.  On the chart above we can see that the move down from Jan to Feb was very directional and that the ensuing rebound has only partially retraced the decline in more time than the decline took to form.  The idea here is that the current rebound is a counter trend move to a larger downward trend or formation of at least 3 moves....DOWN-UP-DOWN

The other main possibility that I see is that the Jan-Feb decline is the first move down of a triangular pattern or sideways move, meaning that most all price action would occur within the bounds of the Jan highs to Feb lows.  I view this as a less probable scenario but we will see.


Pete