All the markets are so fractured and confused. Selective sectors are moving higher and other moving lower. Same for the indexes. Now since we got the break under SPX 1430, I have gone 100% cash going into the weekend. It’s too oversold to short so it’s better to wait until Monday to see how things unfold. Though I distinguished 1430 as a strict bull/bear line, the market range stayed within the confines of a Elliott corrective flat pattern. So with the break under 1430 we had today needs to correct itself starting on Monday and close above it.
A different perspective using the Nasdaq index. As negative as it looks, if we can get a reversal around the 3020 area, and make it stick, higher highs are there before year end. But if we get a retracement higher and hit another low, that would be an Elliott five which is bearish.
It’s too early to declare a a bear move on the same magnitude of 2008 or 2011, but it sure does look like a topping process is in the making. If we did hit the highs, we are only down 3% so 17% or more is waiting. Next week will give us more clues.