Market Update 8/21/2019 - Bearish Patterns Emerge

Bearish Patterns Emerge 

 

This morning I was up at 3:30 AM, and decided to get caught up on some charting. I called the pullback going into yesterday's close, and this morning we're seeing buyers come in at the $SPX 2900 level, but today, I want to look past the 1 min chart.  

Like I said yesterday, I don't like this rally, and don't trust the $VIX at these levels. The trend remains down, on the 60 min charts, and that's kind of a big deal!

We've basically been whip-sawing in a tight range, and that brings me to the $SOX chart.

$SOX - 30 min. view - shows the price action whip-saw into what look like a bearish wave B. If you don't know Elliott Wave Theory, a wave B is a counter-trend pattern, which is followed by a powerful wave C. If the bottom drops out and we start seeing lower recent lows, that will confirm it.  This triangle could be wave A, in a larger counter-trend rally, and if that's the case, we should only see a pull-back, but I'm reading this as a bearish wave, until proven otherwise. 

 

 

 I've added the 60 min. $SOX chart to the Public Charts area, and you'll see the same bearish channel on that chart, as you see above (in blue). 

In case you didn't know it, $SOX leads tech, like $TRAN leads the DOW, and if those can't lead the market higher, that's a red flag.   

$DJIA also trending down, in what looks like a bearish triangle. Once this pattern completes, we should get a nice tradeable rally, going into Sept window dressing. We could see a little washout beyond the end of this pattern, but the 25,100 level looks pretty good. 

This isn't a hunch I'm trading on, We've seen lower lows, followed by lower highs, and the pattern is self-evident. 

We saw a lower low on the $RUT, Energy continues to make new lows, and Oil still looks weak - despite this bounce - but we haven't seen lower lows on the $SPX. That's not to say we won't, but that leaves me a little confused 

$SPX - no lower low, yet 

The only other possibility I see is a possible Dow target of 26,600 in an expanded flat pattern. 

 Stay nimble, until we can confirm a direction. I suspect we're going to see a final washout, before money is put to work in Sept (going into the end of  3rd Quarter window dressing)  

The charts I have published in the Public Charts area, is only 1% of the charts I usually watch. I'll continue to switch the charts up as necessary. 

I see $SPX futures pressing resistance, so I get this update published ASAP. 

Good Luck, Traders 

    

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