I don’t mean to come here to ruin your Monday morning Starbucks, so is there any bullish news to speak of? The BKX did not confirm the new lows of the second part of last week. However, the BKX violated the March low a long time ago. But as long as the banks aren’t leading to the downside there is the chance of mitigation to the technical damage that could materialize this week.
The next issue is the Fed meeting on Tuesday and Wednesday and this one should be more important because the language comes out right on the time window. Not that I really care what the statement reads, the market is going to use it as an excuse to do its thing simply because conditions are ripe for an important reaction. As traders what we need to do is go with the flow because whatever comes out of a seasonal time window can set the table for the entire summer.
The other thing to be encouraged about is the recent apathy from the prior week is gone. It’s our belief that corrections or bear markets terminate when fear spills to the point where fear runs rampant and everyone believes the only way the price action can go is down. We are obviously not there yet since there is belief that the bottom could conceivably hold at the March low. There is a chance of that, isn’t there? So when you add up all of these factors we can see an important reversal this week but chances are it will be from a level LOWER than the March low.
Whatever happens this week I don’t think it’s the end of the corrective period from May or February as the case may be. The point of recognition is rarely the bottom although it could spawn an important trading leg. In summary, this is the point where we should get a turn for a trading leg or a gap down. We don’t predict what will happen; just recognize certain times of the year where we can get the most important reaction. This is one of those times. With apologies to the politics of the early 90’s, I don’t think you can give this sequence enough hype.
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Jeff Greenblatt is the author of Breakthrough Strategies For Predicting Any Market, editor of the Fibonacci Forecaster, director of Lucas Wave International, LLC. and a private trader for the past eight years.
Lucas Wave International (https://www.lucaswaveinternational.com) provides forecasts of financial markets via the Fibonacci Forecaster and other reports. The company provides coaching/seminars to teach traders around the world about this cutting edge methodology.