Strategesis

From Safehaven.com:

As mentioned previously, the market moves in phases, and each phase completion is followed by a consolidation or correction. The Point & Figure chart is the best way to identify these phases, especially the periods of accumulation and distribution which precede them.

When the SPX made its low at 1249, it created an accumulation pattern from which four distinct “counts” can be derived. When each count is attained, a pull-back should take place – at a minimum! Each completed phase count is also capable of producing an important correction instead of a mere consolidation phase. On April 1, the SPX reached its first phase count of 1334 and, although it has slightly exceeded that price level, it has not been able to decisively continue its rally and is clearly making a consolidation pattern which could turn out to be only the beginning of a deeper correction. Some uncertainty is being created by the fact that the QQQ is relatively weaker than the SPX.

When this corrective behavior ends, it could result in an extension of the rally from 1249. Since we have no way of knowing ahead of time which scenario will play out, we need to wait for some clarification and next week’s action should give us some good clues about market direction.

Continued

From Safehaven.com (Andre Gratian):

Could we make new lows? We discussed earlier that the SPX has a valid count to about 1240 and, based on its P&F chart I could make a case for the QQQQ to reach 52.50-53.00 before ending its decline. If these objectives are reached, it would put both indices outside their intermediate channel.

Still, I have reasons to think that this decline will be of limited extent and duration. This is, in part, based on the current position of the SentimenTrader which is shown below on the left (courtesy of same), and which is very bullish.

Continued