The first part of the scenario that I laid out in the recent videos with the major stock indices making a slight undercut of Tuesday’s low following the sharp bounce on Wednesday to put in bullish divergence on the 60-minute time frame is now potentially in play with both QQQ & SPY both closing at a slight undercut of Tuesday’s lows. Should this scenario continue to play out as expected, we should see a green close tomorrow followed by more upside in the coming days & weeks.
QQQ 60-min Feb 8th
If the market fails to recover tomorrow & closes substantially below today’s close, those divergences will be negated & the major indices will have printed weekly candlestick closed below the primary uptrend lines that have been highlighted recently. Tomorrow & Monday could tell us of the long overdue bear market (as defined by a drop of 20% or more) is likely underway or simply postponed for the time being with today’s lows offering one more “buy-the-dip” opportunities on the road to new highs.
I still favor the former scenario vs. the latter but until & unless the market reverses soon, it is hard to say with a high degree of confidence if that will be the case. As such, best to keep things light until we either have decent evidence of a reversal & successful defense of those key uptrend lines or a definitive break below, which would open the door to more downside in the coming weeks & months. To be continued…