Tuesday’s trade saw the market gives us additional information as to direction and count. The NQ again produced a much weaker wave 2 correction with minute 2 not reaching the minimum at the Fibonacci 38% area. The Globex high at 13583 marked the completion point for minute wave 2 with minute 3 unfolding. The NQ did break below low of Intermediate wave 1, which gives additional confirmation that the larger Intermediate wave 3 is in control and continues to subdivide. MSFT and GOOGL reported, and the sellers didn’t wait for the actual reports before selling the index. After GOOGL reported the NQ dropped an additional 100 points reaching the low at 12801 which made the total dropped from the close to 200 points.
This is what I speak of and look for to receive confirmation that a) my count is correct and b) what to expect moving forward. The “crash” talk is increasing. Duetsche Bank issued a report saying the U.S. will drop into a “mild” recession, which I suppose adds to the “point of recognition” I speak about. That point when traders realize that “it” is going to happen.
For tomorrow, I would expect additional downside but please keep an expectation in place for bounces. They will happen and they could be larger or smaller than ‘normal’ expectations. Support for minute wave 3 continues at 12715, and then 12465 which is where minute 3 would be equal to 100% of minute 1. Once minute 3 is complete look for a minute 4th wave corrective bounce followed another leg down in the way of a minute 5 wave decline — additional support for the balance of Minor wave 3 comes in at 12206, 12042, and then 11779 which is Fibonacci 161.8%. I would expect a stronger bounce higher in a Minor 4th wave correction – and once underway I’ll be able to add Fibonacci.