S&P500 ~ today's decline should be followed with another rally before ending the bear correction...


It is hard to believe that this market wants to rally, so bad! Even though today was a big down day caused by the near doomsday news on the coronavirus....it is just a pause before the market tries to rally again......This is the true definition of a "bear market rally."

Since the end of the first five wave decline over a week ago the market has been in a relief rally.

The decline completed wave 1 and the corrective rally underway now, when finished, will complete wave 2.

Wave 2 will form three waves that we are showing as [a]-[b]-[c]. Yesterday's high reached the Fibonacci 38.2% retrace of the entire decline and also touched the upper trend-line.

The high on Monday completed wave [a] with today's decline as part of wave [b] which when complete should start another rally leg for wave [c] of 2.

Notice how the wave structure of the market matches right with the fundamental news events. Price had finished it's first [a] wave rally and just needed a catalyst for the wave [b] down to start. 

Wave [c] should trace out a five wave impulse pattern and could take price sharply higher. The 61.8% retrace target shown on the chart is just one of the common targets. We should also watch for a little good news (all beit short term) coming as the catalyst for the wave [c] rally.


This 30 minute chart shows the short term wiggles making up the sub-waves of the larger degree.

Wave [a] counts as (a) (b) (c) or 5-3-5...this is a correction pattern that helps to confirm the corrective bear rally scenario.

Wave [b] down now is also forming an (a) (b) (c)  which means that the final count will be a larger 3-3-5 "flat" for wave 2.

At the end of wave 2 we'll see the start of wave 3 down. This will be big and will go well below the wave 1 low last month.

Follow the Trend
and
"Trade Safe"

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