After extensive review, I am covering all my shorts tomorrow at around 1618. This is rather significant horizontal and also channel support. By the time we get there, the 50 hourly MA would reach there abouts.
From 1618, I am projecting a fast wave 5 up to 1670-1680.
I have been waiting for an opportune time to get out of shorts. If I am wrong I typically wait until hourly conditions are oversold. We achieved that today but I think there is further downside tomorrow before another large rally to commence.
I am not a bull or bear, just trading how I see it...the best way to make money is to trade both sides and to ignore a lot of the narratives out there. I suggest not to read anything any expert says on CNBC or on marketwatch or on some blog. I think markets only reward those who think for themselves. It is ok to take some of it in but if you take too much, your subconscious takes over and affects your trading.
I ended up seeing this rally through a very foggy lens. Going forward I hope to not make the same error. This was quite costly shorting through this rally.
Just jotting some notes
1635 was the high today. If took the middle of the gap last Friday which was approximately 1607 and took the length from 1581 -> 1607, and projected 26 points on top of 1607, we get a target of 1633.
Taking this a step further, let's take the low of 1536. The distance to the middle of the gap is 1607 - 1536 = 71 points.
Add 71 points to 1607, we have a possible target of 1678. We won't play this exactly so let's give it +/- 2 point buffer...so 1676 to 1680. That could be a likely top area because we're running out of price projections.
Taking the 10 point 3 box reversal P&F chart of the SPX, we can calculate a vertical count off of the November 2012 low of 1340s. The X column rallied 9 boxes up. 9 boxes x 3box reversal x 10 point box = 270 points. Add 270 points to ~1400 which was the next low around the end of the year and you get a target of 1670.