Road Map

Based on the charts we have, the concepts that have worked and have been repeated so often that we've made them part of our system, like the Igloo/Chimney head fake that we had no signals for yesterday to believe it was a probability for today, yet an exact chart was drawn yesterday showing what we would expect conceptually today and it looks exactly the same. So based on these things, I have a sort of road map of what I'm expecting, of course timeframes, targets and the nature of the market itself make a perfect forecast nearly impossible, but the longer term expectations are by far the strongest probabilities, it's the shorter term stuff in between that is more difficult to forecast.

From where we are now....

 Yesterday the SPY broke the uptrend since last week's bottom which are both moves we have been expecting, up and down shortly. Today's price action has been below that trendline.

Even at a wider 60 min chart, the SPX has hit a stop out, yesterday.

Intraday the SPY is getting uglier which is what we expected to see in a chimney head fake move.

 The 3 min chart is calling for a pullback as it leads negative

As are charts out to 15 mins now. I suspect a pullback to last week's lows and maybe some. The accumulation this month or gas in the tank is sufficient to take the market higher, but if you only have 3 good wheels and the fourth is flat, you have a problem and that problem is and has been in the base.

If you look at the last base/cycle from early August, it has a wider bottom, a rounding bottom and even a head fake move to the downside (an upside down igloo/chimney) before it moved up. At it's top the same price pattern we forecasted in advance, a rounding stage 3 top and an igloo/chimney head fake move played out and just before the downside reversal or stage 4 decline which we had predicted would make a new lower low even before the base of early August had broken out to stage 2.

The very sharp "V" base is rare, it's a reversal event rather than the much more common process seen at the last base and the last top, it is also parabolic in nature and I suspect the decline to the downside will be parabolic in nature as well, especially since markets fall faster than they rise.

As you know, I suspect that we make a wider "W" base that gives the rally 4 good tires and it should have enough gas in the tank,  we'll know as price drops lower as it should see accumulation, if it doesn't, then this was just a counter trend bounce and it will make a new lower low and we'll simply hang on to the trading short position just entered and stay with them as trending positions until the next inflection point.

I've drawn several areas of potential support that may hang price up on a consolidation temporarily, those include the former base at the ligh blue dotted line, the 200-day moving average at the dark blue dotted line and if we do make it to the lows of last week, a head fake move below what should be a support area would be high probability.
'
If at that point we have seen accumulation on the way down, we'd want to enter some trading longs on that head fake stop run below last week's lows, but we need to confirm the divergences as this is a road map, but we still confirm.

With 4 good tires ( a stronger base) and gas in the tank, I'd expect a move higher than what we have seen. Last week when I was trying to "Anchor expectations of what to expect BEFORE we even saw the first day higher, I expected a stronger move than what we have seen thus far, but one that ultimately fails.

 The 60 min chart went negative at the last Igloo/Chimney top and is in line now, it should be positive if a stronger base forms.

However the highest probability is with the 4 hour leading negative chart and no matter what the market may or maya not do, this is the highest probability, down and significantly down.

So drawing in some more from left to right we have the August stage 1 base leading to stage 2 mark-up, stage 3 top/distribution and a head fake move "HF" followed by a new lower low as stage 4 decline sets in.

Now at that lower low I expect a wider stage 1 base to form, but again we'll be able to confirm that as prices move lower as they'll need to accumulate and create positive divergences, if they aren't there, then this was a bear counter trend bounce and the market is further along and in more trouble faster than I thought, but we'll still be fine as we'll just hold the current shorts.

Assuming we see stage 2 mark up and a rally to a stage 3 top, I don't have any exact target in mind, it just needs to be strong enough to switch bearish sentiment to bullish, we eventually get to stage 3 top and stage 4 decline, there will be fewer choices of shorts as many have already broken down like one of our long term favorites, NFLX or PCLN. This is the top pattern I'd expect if this scenario plays out and it all really depends on the next decline and whether that is accumulated or not, again, if not, then this was a bear counter trend rally that will move to a new lower low.

Although I don't have the scale to properly draw the price pattern, for the SPX it would be a megaphone or Broadening top. The characteristic of a Broadening top is the final push on the upside almost always falls significantly short of the upper trendline, most of the time only about half way there before failing and breaking below the lower support which has already been broken once, however just like with the initial break of a H&S top, the early shorts are almost always shaken out with a volatility shakeout just like what we've seen thus far.

That's what I'm expecting near term, if we have confirmation we can trade short, then long and back to short again with some significant volatile swings, all moves well worth trading. If there's no accumulation on the decline, we simply stick with current shorts, let them keep working and move forward from there.