The market drifted lower overnight but not as far as I expected.
In $SPX terms futures dropped to approximately 2108, around the top of wave 1 following the Brexit rout as noted by the flag
At the open the market sat upon a secondary trend line which provided ample support to erase most of the losses experienced on Friday. And the soothing balm afforded by Fed Governor Lael Brainard who called for “prudence” in raising interest rates only assisted what was underway.
Because the correction was shallow and lasted effectively one day, I'm inclined to be believe there is room for further short term weakness as we are trading in an ascending wedge that favors the bears.
Further, September is typically a bad month for major equity indices and I would be looking for failure around 2186 but want corroborating support in averages, VIX and RSI divergences
The problem with the bearish case is the next Fed meeting is close at hand and a rate increase is unlikely (my opinion) and we are in an OPEX week and these weeks tend to be bullish but this is not a hard rule.
If the market Gods push it though the upper channel line and put in a new high, chances for further weakness are seriously diminished
In $SPX terms futures dropped to approximately 2108, around the top of wave 1 following the Brexit rout as noted by the flag
At the open the market sat upon a secondary trend line which provided ample support to erase most of the losses experienced on Friday. And the soothing balm afforded by Fed Governor Lael Brainard who called for “prudence” in raising interest rates only assisted what was underway.
Because the correction was shallow and lasted effectively one day, I'm inclined to be believe there is room for further short term weakness as we are trading in an ascending wedge that favors the bears.
Further, September is typically a bad month for major equity indices and I would be looking for failure around 2186 but want corroborating support in averages, VIX and RSI divergences
The problem with the bearish case is the next Fed meeting is close at hand and a rate increase is unlikely (my opinion) and we are in an OPEX week and these weeks tend to be bullish but this is not a hard rule.
If the market Gods push it though the upper channel line and put in a new high, chances for further weakness are seriously diminished