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Another capitulation day

Slow drip down with slow asceleration to the downside as the day wore off.

It was obvious investors and most traders were already out of the door and into the weekend holiday.  Volume was non-existing making it too easy for the bears to keep shorting the markets knowing that there will be no buyer.

I bailed out of my SPY, FAS, and ES longs below 1055 Spx and just waited out the whole day for the cavalry to arrive at 2:00 p.m.  It was a better decision otherwise the losses could have gone much larget than expected.

The cavalry did arrive at 2 pm and off they go with an impressive potential reversal by the time I was writing this post.

Since I can't make a good wavecount for SnP500 intraday charts;  I used the ES 240min 24-hr chart instead.  Sometimes the wavecounts are hidden into ES, YM, or NQ.    So far ES wavecount seems able to produce a reasonable result as ES suddenly reversed course with perceptible energetic bounce at the exact equal move target of 1040.75.

I was able to buy back my SPY, ES, and FAS longs very close to the intermediate bottom before ES exploded to the upside.  Whether this bounce will sustain or not remains to be seen.  But at least the equal move setup has a better chance to succeed given that most traders and investors were already taking their weekends off long before the day was over.

There are 2 basic scenarios for this type of trade:

#1.  A pullback that enables Spx to retrace at least 61.8% of the ABC run down in 14 to 28 days:

#2.  A rally that must be able to reach 1150 in 14 days or less.

There are other scenarios but these 2 are the most frequent occurences.

For the Bears:

They will have to prevent SnP from retracing above 1082 because once Spx breaks above that level then chances are it will be able to reach and exceed 1110. 

Then the next fight will start again;  they will have to prevent a double top because once a double top has happened, the the probability of a rally toward 1230 area will become extremely high.  There is a void of resistances from 1150 to 1230 area thereby making it supposedly relatively easy for the bulls to go for that target area once 1150 has been taken out.

If the #1 scenario pans out;  they will have to drive Spx way below the low of A-wave in order to start a multi-month pullback or meltdown.

Scenario #3 is a triangle forming.  Low probability at this stage.

I will be adding more long positions in Monday once the next expected a-b-c down correction on 5min starts materializing.  Preferably at 1057 area.  There is a major resistance intraday at 1067.50.  It should be able to prevent an extended 5th up on 5min that is now forming.  Then there is a potential invHnS on 5 or 15min with perhaps 1057 target depending on where the 1-2-3-4-5 ends.