The confusion isn’t over whether the market will continue selling off. It will. The question is how far it can sell off before it’s “rescued.” Different indices indicate anywhere from 2.2% to 20%. And, it totally depends on which index gets to call the shots.
If the Dow has its way, the market is in for another 2.2% decline (our target at its 200-day moving average), at which point Powell would call a press conference and declare “just kidding.”
But, the Dow has already backtested its Feb 2020 highs.
continued for members…
TPTB might be understandably reticent to revisit them.
The others have not. COMP, for instance, suggests a 9% decline.
And, SPX is sitting a good 12% above its 2020 highs and nearly 20% above a couple of much more legit targets.
The ES version:
In general, these targets presume that SPX can remain in its rising yellow channel. The only time since 2009 it hasn’t was the pandemic crash in 2020 when central banks and treasuries around the world moved heaven and earth to prevent a greater depression.
I’ll be working on this disparity in targets in the coming days, with the goal of posting a fresh big picture post by the end of the year. Suffice it to say now that the bloom is off the rose.
Currencies are still maintaining a sense of normalcy, with EURUSD failing to fail so far.
And, CL and RB both declined to break out again.
