Looking at the SPX it's hard to imagine any significant bounce any time soon and I say significant only because in order to undo last week's worst market performance in 3 years, any move to change sentiment (and if it doesn't create motion by changing sentiment, what good is it?), needs to be impressive which is exactly what the IWM breakout above it's range would be as it's such a long range never penetrated on the upside.
From a conceptual point of view, it's also a long top/range without a head fake move, meaning I don't really even consider this the real fall of the market.
For example...
The IWM's larger top that is over a year long and is at a loss year to date put in the same initial head fake breakdown and shakeout of shorts as the SPX did.
SPX made the same larger top head fake/Crazy Ivan shakeout on a larger scale . However looking at the SPX, it appears it has lost more ground, partly an illusion because of the IWM's long term range.
Here's the IWM range and the first half of a Crazy Ivan shakeout below the range, note all momentum has dried up as the stops and orders were hit below the range, it's in perfect striking distance for the upside head fake (second half ) of the Crazy Ivan shakeout and setting up the head fake move for the actual stage 4 decline, sharper than what we saw last week.
The charts of the averages themselves look more impressive very near term than the futures, while the futures have a better bird's eye view of the entire area and process.
I'll be updating this morning's charts, but notice IWM is making a Tweezer Bottom so far today off of yesterday's extremely short term oversold condition with 9 of 9 S&P sectors red and something like only 38 of 239 MS groups green, the rest red.
Our thesis of a Crazy Ivan/Santa Claus rally head fake/shakeout or bull trap is still very much within reason.
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