Yesterday's outlook discussed the fact that the rally from Aug. 30 appeared corrective, and was thus likely to be fully retraced -- and that happened pretty much straight off the open yesterday. The short-term pattern is finally starting to shape up into something vaguely recognizable, and while there are still different interpretations, there are now some additional clear short-term levels to watch going forward.
My intermediate and long-term outlooks remain bearish. The short-term is less clear, but leaning bearish.
Accordingly, I'm going to lead off with the S&P 500 (SPX) 15-minute chart, which is loaded with annotations and outlines the key short-term levels. There are two bearish options for this pattern: a leading diagonal, or a bearish nest of first and second waves. There's nothing yet to differentiate the two patterns, but I'm ever so slightly leaning toward the more bearish interpretation, which would see the market gearing up for a solid drop in the more immediate future. The chart explains the rest.
Next is the 30-minute SPX chart, which hasn't changed much over the past month.
Finally, a quick update to the SPX monthly chart and the position of the potential cross of the 50-month and 200-month moving averages. I covered the historical significance of this in detail in this article. The two averages have edged ever so slightly closer to crossing, and are now only 4 points apart.
In conclusion, while the intermediate outlook is still bearish, the short-term continues to leave its options open -- but I'm favoring the view that the pattern is finally wrapping up and the four-week-long trading range will soon be in the rear view mirror. Trade safe.
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