From an update 3 days ago…
“Think of the 60 minute as the ignition, but the daily would drive the bus to Correction City…”
The 60 min. chart did its job and gave the inkling and then the trigger to the correction. Now the daily takes over and drives the bus through the gap and would-be support (now turning to resistance). The original target was for the bus to potentially stop at 1980 to 2000. That is the top of the ‘W’ pattern and I would think it would not be given up easily.
The weekly chart is interesting because it kept SPX in its topping posture despite the wonder bounce. Over bearish sentiment was eliminated in favor of over bullish sentiment and this chart remains bearish. But there again is the 1980-2000 area, with a moving average that supported the October 2014 decline.
Speaking personally, as long as the 1980 to 2000 area does not give way (+/- a few tics) I am trying to remain balanced between shorting and select long positions. You should use the information above and operate in accordance with your plan. As always in difficult markets, cash is the best default option until the picture clears.
The point here is that this correction has begun the process of determining whether the next big move is down (favored) or manic up (significantly less favored but possible, given policy maker interference seemingly 24/7 and the volatility it helps instigate).
My personal preference is as a longer-term trend trader because I am a spotty short-term trader without ample time to devote to it. Taking out the summer lows confirms a new bear trend (or bear market). Taking out the recent high puts on a bull resumption. Again, that is not favored but there is still a lot of work to do either way.