Oct

13

veltSP ideal downside target of the entire Elliott Flat Correction from 2007 record of 1587 lies near 2002 low of 768. My feeling is that lack of clear technical indications and overall regulatory uncertainty will combine to reduce trader activity and directional movement. Subsequent chart action will likely become more grinding, thus eating into implied volatility. In the interim, one should take count of the entire crashing wave as it developed since the "mother of all short-squeezes" on Sep18-19.

Intraday chart of E-mini dissects the waves of the ensuing three-week fall: we have entered wave 4 consolidation, which should retrace toward 966 or max.1006 rally objective. Note previous four rally attempts: each squashed by size offers in Globex order books at precise 38.2% retracement levels. By the way, most of those "timely size orders" came in similar suspicious pattern: "insider" short-covering commenced off of 9/24, 9/29, 10/6, 10/8 lows; followed by bullish announcements of unprecedented government actions - and then stonewalled by the 38.2%-retracement size offer! Following tremendous short term oversold, the pattern was tellingly modified this Friday: to offer only 50% bounce after US pit open, and then a 61.8% bounce near pit close!


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