16 Dec 2014 - 5 Waves Will Be Bearish..

Price action on the SPX suggest it is possible for a 5 wave pattern to form within the next day.  Todays late day drop has produced a 3 wave to new lows, so we should expect an expanded or a triangular pattern to form for a 4th wave.  A continued decline tomorrow with a minute 5-wave decline would mean that we have our v-wave complete and a rally would occur.  Maybe this is a good example of where many will think the FED is behind the cause of the rally but in reality it was going to happen no matter what..

In any case, my indicators are bearish and down-trending at the moment.  I do see divergences so I need to be aware of the possibility of a rally coming.  If one is not comfortable holding their short but unsure how low we could go, I would suggest taking some off the table.  If a triangle forms for tomorrows session I could put a short position on short-term with a target of 1950 where the 50% and the 200 Day MA sits.  This in my view is a strong support..

MT: DOWN
ST: DOWN
PA: DOWN

 

Previous Posted Chart:



If a 5 wave structure occurs then we could be looking at patterns in this form... (Remember it's just a what if Forecast).