After the release of the Fed minutes yesterday, the outsized moves on both sides made the trading narrative a bit messy. At this point, the two bull/bear paths are such: The bull path is the S&P 500 (SPX) 1649.43 marked the interim low and it is now the SPX will retrace higher. While the 1685 level is the defining bull/bear level where market watchers will key on, a decent early warning sign is TD Propulsion. The idea behind it is if the market is strong enough to break through the TD Propulsion level, there is a high probability that higher levels will be reached. It is not a primary indicator but it is interesting to watch how that level gets respected in some degree. The bear path is the market continues to chop and eventually resolves lower. That path is dictated by the current TD Buy Setup on the daily which is bar 7. The second path is my primary route at this point but will break if the SPX closes above 1655.83 today. Yesterday, Netflix (NFLX) recorded a 13 count TD Sell Countdown and today will record the final 9 count for TD Sell Setup. Given the momentum and the lack of confluence among longer duration TD Sequential counts, NFLX can simply consolidate before powering higher. For those inclined to short, the risk can be easily defined if you use the recent highs as an aggressive stop. My preference is to wait for a better entry point.
I was able to scalp some downside after the Fed minute release yesterday but remained neutral for the remainder of the day as I did not know how the close will resolve. Currently positioned short and the stop is the daily bullish price flip at 1655.83 close. My conviction level is not high but the risk/reward is good here (around SPX 1655) and would like to take advantage of a another leg lower if it materializes. Bear in mind, a lower low tomorrow is necessary to “perfect’ the daily count at 1639.43. (updated intraday)