As I said last night:
Lastly, I want to caution you again about position sizing. The market has been acting almost too perfectly, and I am expecting a curve ball soon.
And, true to form, it gave us a curve ball right on cue, and we did not have to wait longer than the next day. The main reason I expected this curve ball when I did was because we seem to be within the heart of a b-wave. And, when you are within a b wave within a b-wave of a (b) wave, well, they are fraught with many unexpected twists and turns. So, this was the ideal place to expect one.
Again, this is one of the examples of the power of Elliott Wave analysis. Not only will it provide you accurate turning points in the market, it will usually provide advance warning of when the market will likely become more erratic.
What we did accomplish today was that we increased the likelihood that we are not going straight down towards the 2400SPX region, at least from a probabilistic perspective. Rather, it would seem that these machinations have increased the probabilities that we are heading higher before the market is going to attack the 2400SPX support region.
Now, since we are rather confident that we are in a b-wave, it tells us to continue to expect further machinations. While we certainly may be heading up to the 2470SPX region sooner than later, the market is telling us that it is trying to shake traders loose before it heads higher. But, when it does head higher, it will likely be shaking off the short traders in the market in order to set up a c-wave down to test the 2400SPX region with the fewest short traders aboard that ride lower.
So, let’s recognize that the environment we are in right now (and may be in for another day or two) may continue to provide more twists and turns, but will likely resolve itself higher into next week.