as per my recent primary scenario, the major indexes ($SPX & $DWC) are now clearly trading back inside of their bearish rising wedge patterns, confirming step 1 (a move back inside of the wedge following the recent wedge overthrow). given, we do still have another 1.25 hours left in today’s trading session so we still need to see a definitive close inside (or below) the wedges. the next steps would be a breakdown below those wedges followed by all key indices moving back below the levels where they recently made their impulsive breakouts to new highs back on sept 6th.
once/if all three criteria are met, i believe that the odds will increase for a much steeper decline although with the heavy hand of global central bank intervention right now coupled with the US presidential elections right around the corner, any sharp selling is likely to be met with “interference”. however, the charts are the charts and all we can do as traders or investors is to trade the signals that we are given, not what we think “might”, “could”, or “should” happen.
personally, i continue to use liberal stops on my shorts & give preference to booking quick profits on longs (taking partial or full positions off at the lower targets). as mentioned before, i do believe that the selling is likely to accelerate much faster than most would expect on the downside if my preferred scenario does play out. updated $DWC & SPY daily charts below:
