The market’s been quiet, but we can feel the storm brewing. Two years might not be shouting crisis, but the cracks are starting to show. The real panic hasn’t set in yet, but when it does, $SPX is going to break below 3, and things are going to get messy. Right now, we’re watching the first fractal wave of a multi-year bear market unfold, but it’s possible we’ve hit the peak of that first leg. It’s a classic case of market exaggeration, but don’t be fooled. The second leg is where the real trouble starts.
If $SPX crosses 5565, that’s the key trigger for confirming the second wave of this corrective rally. It’s all about retracing 38.2 to 50% of the first leg, bringing the market closer to 5765-5840. A rally that hits these points could be a false signal, but it’s important to stay focused on the levels and not get caught up in the emotional noise. This isn’t a time for hasty bets or wild optimism. It’s a time for precision and understanding how the market is setting up for its next big move.
There’s still some risk for choppy downside action as long as we’re below that 5565 mark. If it holds, we could be looking at a rocky path ahead. But for now, the way the technicals and sentiment are aligning, it seems like we might have just seen the low of the first wave. That doesn’t mean the coast is clear, but it’s enough to put a pause on the doomsday thinking. The next move, though, is uncertain.
Let’s break it down. The first option is a rally to the 200-DMA, which could fail and send us right back into correction mode. The second scenario is a rally to the 50-DMA, followed by a retest of the broken support at the 200-DMA. The third option? The bulls may manage to regain control, pushing the market to the resistance of all-time highs before another test of the 50-DMA. In the end, no one knows which path the market will choose, but staying nimble is key.
The past few days have been a wake-up call for a lot of investors. People are finally realizing they’ve chased the herd into a bubble and that valuation matters. That bubble may have popped, but it’s only a matter of time before people forget this lesson again and get swept up in the next rally. But if you’re watching closely, you’ll see that price discovery is inevitable—it’s just a matter of when.
As we watch the market swing in both directions, one thing remains constant: financial advisors will never go out of business. People will always be people, and when the panic comes, they’ll need someone to tell them what to do.
Sources:
https://x.com/TonyIsHere4You/status/1899444019408629782
https://x.com/TriggerTrades/status/1899596281304985955
https://x.com/LanceRoberts/status/1899785588339052562