Two days before the BREXIT slaughter fest we timely showed a big move was coming to the markets, based on the tight Bollinger bands. See here. The market lost 5.7% in a matter of two days. We advised our Intelligent Investing members to be all cash prior to the UK vote and saved them a lot of head ache. In fact, we already showed on June 8 that SPX2121 was a significant top. See here. Talk about timely if we may say so our selves.
However, that’s now all water under the bridge and what matters now is that the market is staging a come back and it is up to us market analysts to decipher if it is only a “dead cat bounce” or the start of a new leg up. For that we can use many tools. We like to use Elliot Wave (EW) techniques and Technical Analyses (TI). See chart below.
To start with the first, EW, we so far there are only 3 waves down (red a,b) from the SPX 2121 high labeled as 1/b to SPX1992 labeled as 2/a. The labeling means we are yet unclear if the entire rally from SPX1810 to 2121 was the start of a much larger leg up to SPX2500+ or only a corrective bounce. We then see that on Monday price bottomed right in our preferred “Wave 2” target box, based on typical Fibonacci retrace levels. As such we labeled that low as “2/a?”
Using our proprietary A.I. buy/sell indicator; the 3 TIs shown below price, gave an ideal buy signal today (green up arrow) as all 3 TIs moved back up today from <20 to >20. The last such buy signal was given early February (left green arrow). The red down arrow (mid June) shows the prior ideal sell signal. The current A.I. buy signal suggest the black 1, 2 count is operable. Hence, the next larger move is likely up and underway.