I don’t think anyone expected such a sharp drop during this lazy World Cup quarters pre July Fourth week. And maybe that’s exactly why it’s happening – remember that the market is always out to hurt most participants and I’d call that a textbook curve ball that should be added to the bears hall of fame. I know what you are thinking: Is it over for Soylent Green? Where do we go next? Attempts at providing (reasonably sounding intelligent) answers below. But first, let me do the honors:
Rammstein time! 🙂
The bulls are clinging to their 1040.78 May low by a thin thread – as I’m typing this we have been holding 26 cents above. So yes – as long as we stay above this mark we could still theoretically see some form of Soylent Green – it’s not impossible.
But is it realistic? NYSE A/D ratio is currently at a 0.09 reading – that’s a D/A ratio of 11.04! Pretty nasty and I’m not sure how much longer they bulls will be able to hold their position. Plus look at that early morning gap – which is very typical for a third wave. Pappa Prechter calls this the ‘point of recognition’ and it would very much fit into the premise of my Minor 3 of (1) count.
The AUD/JPY seems to be correlating with equities better than the EUR/JPY as of late. And the former is basically reaching terminal velocity at this point. Yes, there will be a bounce at some point but how much will it benefit equities? Also note that equities are actually lagging the AUD/JPY – which has descended a lot lower.
Here’s the view on the EUR/JPY – seems a bit stronger than the AUD/JPY and maybe equities will trace this one if it manages to push above the 20% mark – thus far equities are leading it down. Maybe I should just average between those two pairs… unfortunately it seems tough to do in either Prophet or TOS charts (it’s that slash that’s screwing it up).
A breach of 1040.78 may not happen today but at this point it seems that the bears are on a winning streak. Triple bottoms do form – but even if it does – how far will the bulls be able to push this thing up until we find ourselves right down here again? But the 45 year old virgins (i.e. the bears) need to finally close the deal and that means thrashing that 26 cents cock block preventing a free fall into SPX 980 minimum.
3:25pm EDT: Soylent Green is officially dead as we just breached the 1040.78 low on the SPX. Short term we may bounce here soon but the technical damage is done.
Closing Bell: The bulls for some reason stepped in to push the close by a few ticks – won’t do them any good. Soylent Orange is our prime scenario as of now.