4 replies to this topic

[Douglas]

According to my turn probability summation system, the day with the highest chance of seeing a turn in or acceleration of the current down trend in the DJIA is Monday March 30th.  The second highest reading is on Thursday April 2nd right before the long holiday weekend.

 

Last week the high reading day for the turn summation, Monday March 23rd tagged a big rally which failed forming what now appears to be an important top of one degree or another shown in red on the edited marketwatch.com plot below.

 

 

Last week I clearly jumped the gun thinking the first wave down of this correction or bear market or whatever the heck it is was over.  The stair step down continued all week after the POTUS induced early Monday morning short squeeze rally failed.  In the futures market the squeeze rally was even more pronounced and may actually have been a wave two up meaning the first leg down was indeed finished.  Heck if I know whether the futures or cash market has it right.  You would think that surely now the first leg down is over, but option trading sentiment did something that I don't understand late last week.  The individual stock Put/Call ratio dropped sharply even as the market was sinking substantially.  The index Put/Call ration rose as you would have expected.  It appears that late in the week punters believed that the low was in on their favorite stocks and decided to place bets to that effect as shown in the plots below.  This is bearish in my book.  

 

A more bullish indication of sentiment occurred today when the NY Times put a picture of the declining S&P on the front page of their on-line edition.  Hard to know which sentiment will win out.

 

 

 

Finally Powell talks on Monday.  What do you think the odds are that he will crank up the pump a notch or two?  This sell off is pouring cold water on his bias towards easing making tightening a lot more likely next move which will absolutely enrage the POTUS who has a bad habit of bombing his antagonists both metaphorically and physically, not an attractive prospect for a guy who's already in his gun sights.  I'm thinking Powell pumps hoping the war winds down before the next Fed conflab at the end of April giving him some breathing room to use his go to word, "transitory", to justify doing nothing despite raging inflation.  I bet he will look for any excuse not to jump the gun on rate increases.   

 

Regards,

Douglas 

Edited by Douglas, 28 March 2026 - 10:38 AM.

[Douglas]

Just about every cotton picking time in the past when I showed downside targets in sell offs, the market immediately turned tail and headed straight up, so despite this tendency, below I show three possible downside targets areas for the SPX:

 

1) The 6170 neighborhood which is the 38.2% retracement in green of what I show as a 5th wave which also roughly coincides with the February 2025 3rd wave top

 

2) The 5700 area which is the 61.8% retracement in green of the 5th wave  which is also about the 38.2% retracement in blue of the entire bull market since 2022 and a gap fill shown in purple and is pretty close to the 175 week EMA in red which has tagged previous lows

 

3) The pessimistic 4800 level which is the 61.8% retracement of the bull market since 2022 which also lines up nicely with the 4 of previous degree

 

 

Having said all the above, sentiment is now screaming buy as shown below, so any inkling of good news will send the indexes absolutely roaring higher be that actual good news or POTUS pretend good news for the sole purpose of market manipulation, regardless, it heads higher pronto making a mockery once again of my targets above. 

 

The chart below shows the CNN bullish sentiment indicator which is currently knocking on the door of single digits, a very low reading, which has coincided with market lows in the past

 

 

Regards,

Douglas

Edited by Douglas, 29 March 2026 - 06:57 AM.

[Douglas]

Well, maybe it's time for a bounce in the DJIA. 

 

The CNN Sentiment indicator is now in single digits and I can see five complete waves down in my rudimentary daily EWave count shown below.  I suppose whether those five waves comprise a Wave 1 or A depends on the depth of your pessimism.  Short term I don't think it matters since both call for a rally higher. 

 

Now if the wars or oil or better both would just cooperate and provide a fundamental reason to get temporarily cheery.  Also yesterday morning saw an everything rally - the DJIA was up, oil was up and bonds were up - hard to square that circle.  Maybe it just means the selling has run its course short tern at least.  The POTUS appears to be trying to crawfish, looking for some way, any way, out of this mess, and while I didn't hear J. Powell use the "T" word in his speech yesterday, he did mention looking through this surge in oil prices which is pretty much the definition of transitory . 

 

Anyway, this all seems to me to be laying the ground work for a bounce, whether a big ole size 5 or just a measly size 1, who knows, but a bounce never the less.

 

 

Regards,

Douglas

[steadyquest]

[12SPX]

Nice chart with trend lines