Morning Java

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The S&P 500 ($SPX) flirted with the underside of the 200-DMA shortly ahead of the close of Thursday's cash session. The ensuing pullback is not the least bit surprising, given the imminent 'Death Cross' due in the next few coming days right around the 275-276 area on the $SPY. But does the 'Death Cross' historically live up to the hype? Has it always been a kiss of death for the bulls? Be on the lookout for an upcoming video dedicated to this subject.

For now, let's prognosticate a bit on what prices might have in store on the heels of this week's run-up. At the open, I'm looking for the E-mini S&P 500 Futures ($ES) to revert to yesterday's vPOC of 2738 after pulling back to 2729 during the overnight session.  But given the nature of the October down leg and the ensuing early-November rally, both of which unfolded as zigzags (A-B-C), the next installment of the post-October sell-off is also poised to develop as a zigzag. Hence, a pullback to the 2675 area (the lower of the two yellow distributions), would serve to form the right shoulder section of a prospective inverse Head-and-Shoulders. I say 'prospective' because confirmation won't be on hand until price busts through the 275-276 area.

Chart references:

Chart 1. Weekly Auction and daily candlestick chart pinpointing the location of the imminent death cross.
Chart 2. The wave pattern on the daily chart implies a multi-week consolidation whereby the right shoulder is unfolding as a double zig-zag wave pattern.



Trade vigilantly,

Peter Ghostine (@peterghostine)

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