My current technical view is reflected in the handful of charts below.
Dow Jones Transports ($TRAN)
Chart 1. The $TRAN has finally reverted to its 50-month moving average.
Chart 2. Coinciding with the 50-month moving average depicted in chart #1 is the inception point of the yellow Expanding Terminal, which was finally
reached this week when price cut through the neckline and the TDST Support line like a hot knife through butter. Yes, the chart does sport a Head and
Shoulders look, but only a few suspected Head and Shoulders setups live up to their expectations. We'll monitor this one closely.
Russell 2000 ($RUT)
Chart 3. For the $RUT, the magic number is 1040, i.e., the October 2014 low and the current location of the 50-month moving average. Again, mean
Chart 4. The $RUT's wave structure strongly suggests a double zigzag formation that has either ended at Thursday's low, or could end in the coming
hours at the October 2014 low.
Nasdaq Composite ($COMPQ)
Chart 5. As far as the $COMPQ, the August 24th low tested the '0.786 XA' level. Thursday's low tested the '0.886 XA' level. The latter would have been the
'harmonic Bat scenario' PRZ, had it not been eliminated in favor of the Crab several months ago. Having reached and exceeded the prior all-time high
established over 15 years ago, it's certainly not unusual for the market to go through a protracted consolidation period mired in volatility.
Dow Jones Industrials ($INDU) / 3PDh
Chart 6. The early Q4 rally reached point 15 in our 3PDh scenario, after which a 5-wave decline (16-17-18-19-20) finally reached and filled the open gap on
Thursday. This forecast remains on track and should be further bolstered once the second-floor-wall phase of the pattern gets underway.
Philly Semiconductor Index ($SOX)
Chart 7. The August 24th low back-tested the triangle's b-d line before reversing course. The January 2016 decline aimed to fill the open gap.
Chart 8. While many indices are back near, or have exceeded, their respective August 24th lows, the $SOX/$SPX relative-strength ratio index is nowhere
near its August 24th reading. This bodes well for the bullish case.
Chart 9. In recent days, as stocks continued to hemorrhage valuable points, the associated declining volume actually receded, hence causing the $TRIN to
revert to the 'in balance' red line (market 'in balance' = 1). This divergence in and of itself is yet another bullish ingredient.
Chart 10. Thursday's sell-off was as close to a '90 percent session' as could be expected. Prior instances of 80-90 percent sessions invariably resulted in
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