SPX, NDX and DJIA confirmed the Spinning Top reversal from the candle perspective. Yesterday I mentioned that a close below Nov 8 low would be a confirmation.
It happened. All three indices closed lower than yesterday’s low with various red candles. The DJIA RSI moved from the overbought territory down. If SPX and NDX RSI join tomorrow, it would reinforce the bearish odds.
SPX/ES extended 2.618 off the September low and I view this level as a possible pullback zone.
Currently I am tracking three possible paths as shown on the chart above:
- Green (primary).
Wave 3 completed. Expected pullback to $4560-4620 in wave 4. Green rectangle.
Wave (1) completed. A bigger pullback to $4450-4600 in wave (2). Red rectangle.
The correction that started in September is not over. Possible wave C, targeting $4200-4500.
Of course, as the bullish odds are never zero, there is a chance of continued rally. The indices would need to close at a new high for that. The bullish odds are rather slim.
Let’s see how the indices move tomorrow.
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