Still Bottoming Signals - Market Analysis for Feb 23rd, 2023
By
Avi Gilburt
I really do not like moving the goal posts unless the market gives me good reason. And, despite a break down below 3980SPX today – even though we are still flirting with it as I write this update, the market is giving me signals that I may need to give it a bit more room.
First, I want to reiterate that the rally off the December low was NOT a standard Fibonacci Pinball 5-wave structure. And, if we are indeed expecting a c-wave rally off that low, then they are most commonly 5-wave rallies. Yet, the only way to count it as such is as an ending diagonal. And, when we are dealing with diagonals, they are much less reliable than standard Fibonacci Pinball structures, as they come with greater whipsaw, which means that sometimes you do have to give them a bit more room.
Second, I am still seeing divergences across many charts which suggest “bottoming” the great majority of the time. I am still seeing them on the smaller degree SPX charts, as well as the 60-minute SPX chart. Additionally, there are other charts which are suggesting the same.
So, I am forced to give this downside a bit more room to the 3950SPX region. Again, my apologies, but I think the structure is forcing my hand on this one.
Of course, if we break down below 3950, then I am really out of room and have to assume that we are either in the yellow wave [2] down, or, the high we struck on what seemingly is only 3 waves may be a bigger b-wave of the [b] wave. I have not mentioned this potential yet, and may wait until the weekend update to discuss this. But, both potentials will likely take us back down to the 3800SPX region.
But, for now, I think I am forced to give the market a bit more room.
As I have noted many times before, when dealing with potential a-b-c structures, they are much less reliable than the standard Fibonacci Pinball structures. And, this is clearly one of those times. So, please understand your environment, and adjust accordingly. I am still very much leaning towards another rally to be seen. But, due to the nature of the market in the rally off the December low, I cannot say that my probability is as high as 70%+.
