Are Storm Clouds Building to Bigger Correction?
Wall Street was taken by surprise with Goldman Sachs (GS) and IBM. Is the glass full or empty, asks Jeff Greenblatt. He’s the director of Lucas Wave International and editor of The Fibonacci Forecaster.
Last week (April 12) we discussed a test of important support in the SPX. We looked at the near-term Andrew’s channel and the 78-hour square out. Whether we are looking at trend lines, Fibonacci retracements or square outs, eventually support is meant to be broken. Since markets are non-linear, each piece of new information is part of what the market is trying to tell us.
The SPX broke near term channels the next day before a holiday weekend. For this week’s chart, we look at the channel one time frame larger, the daily. This is the channel for the leg of the rally up from the Brexit low last year. Not only did the near term hourly channel break, but at the same time the daily was pierced as well. Right now, the SPX is giving us mixed signals. One would expect a breakdown to be retested at some point, but this one did it the very next day as opposed to a few days later.
Is the glass half full or empty?