Weird Action Today - Market Analysis for Mar 14th, 2024
By
Avi Gilburt
After the worse than expected inflation report came out this morning, the market continued to hover up near the resistance region once again. And, it was not until after the market open did this decline today begin.
Oftentimes, when the market shrugs off bad economic news, it usually leads to a move in the opposite direction that many would expect based upon the substance of the news. While that occurred initially, the downside thereafter is a bit unusual. Yet, we cannot question price. So, how do we interpret it?
Well, in the bullish count, this is supposed to be a [c] wave of iii, which is usually a pretty strong move up. Yet, that is not exactly what we are seeing. Nor are we seeing evidence that an ending diagonal has yet completed, as we seem to only be grinding around in this region.
So, to keep this very simple, as long as we remain over the [b] wave – 5091SPX – I am forced to continue looking higher as nothing is broken, even though it is not “acting” as I would normally expect. However, should we see a break down below 5091, I have to look at that as an initial topping signal. Of course, I still need to see a break down below 5056, with a strong follow through below 4946SPX to confirm that we likely have struck a major top. So, nothing has really changed in my video of the SPX.
The IWM is also giving me a bit of trouble too. While we have now broken down below 203, I still do not see a CLEAR 5-wave decline structure. Of course, it is entirely possible that the wave 1 down is taking shape as a leading diagonal – clearly, not my preferred pattern. But, for now, I have to assume that a top has been struck in the IWM.
Alternatively, if I were to draw the trend channel as parallel, then we could be bottoming in a 4th wave within a larger ending diagonal structure, with the market still wanting to make a run at the 213/214 region. For now, I am leaving that as an alternative, and viewing the IWM as having topped. But, again, due to a lack of a CLEAR 5-wave decline thus far, please keep an open mind as I may be forced to move to the alternative.
In summary, if the SPX can break down below 5091, while the IWM continues lower, then I am can much more strongly consider a top being in place. But, for now, as long as we remain over 5091SPX, not even a micro support yet to be broken, and the bulls can still remain in control and point us towards the 5350SPX region, despite this lackluster action of late. So, please do not get too bearish just yet.
