S&P 500 Big Picture - Bearish Scenario
Many investors are already assuming a breakout from the upper trend line and thus a continuation of the uptrend.
The economic sentiment is still bearish, many companies now have to bear the high capital and energy costs and many companies are still highly overvalued.
Therefore, today we would like to introduce you to a bearish scenario that is likely to occur, the Double ZigZag.
Structure of a Double ZigZag
- Superior: (W) - (X) - (Y)
- Subordinate: (ABC) - (ABC) - (ABC)
- Subwaves: (12345 - ABC - 12345) - (ABC) - (12345 - ABC - 12345)
Current situation
If this scenario is correct, we would be in the last sub-wave ABC and now see the last downward movement as sub-wave 12345. This would complete the last subordinate (ABC) wave.
This scenario would be confirmed if in the next few days/weeks the SPX initiates a trend reversal to the downside. We already see a weaker SPX struggling to pump above the yellow highlighted resistance. Even if we could make it above this, it would have to be retested first and thus hold above resistance.
We now expect the SPX to either make another small breakout to the upside before correcting back down, or for the SPX to correct right away.
Strongly changing market
The market is very difficult to assess at the moment. Many economic news are affecting the markets very strongly, new political and economic changes are coming at a record pace and most investors are still afraid to lose money. Thus, this Double ZigZag scenario is one of several possible scenarios. We will post a bullish scenario in the next few days.
The economic sentiment is still bearish, many companies now have to bear the high capital and energy costs and many companies are still highly overvalued.
Therefore, today we would like to introduce you to a bearish scenario that is likely to occur, the Double ZigZag.
Structure of a Double ZigZag
- Superior: (W) - (X) - (Y)
- Subordinate: (ABC) - (ABC) - (ABC)
- Subwaves: (12345 - ABC - 12345) - (ABC) - (12345 - ABC - 12345)
Current situation
If this scenario is correct, we would be in the last sub-wave ABC and now see the last downward movement as sub-wave 12345. This would complete the last subordinate (ABC) wave.
This scenario would be confirmed if in the next few days/weeks the SPX initiates a trend reversal to the downside. We already see a weaker SPX struggling to pump above the yellow highlighted resistance. Even if we could make it above this, it would have to be retested first and thus hold above resistance.
We now expect the SPX to either make another small breakout to the upside before correcting back down, or for the SPX to correct right away.
Strongly changing market
The market is very difficult to assess at the moment. Many economic news are affecting the markets very strongly, new political and economic changes are coming at a record pace and most investors are still afraid to lose money. Thus, this Double ZigZag scenario is one of several possible scenarios. We will post a bullish scenario in the next few days.
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