Although I have made my readers aware that an outsized move might be about to occur due to the repeated warnings from breadth, momentum, Arms, Put/Call ratios etc, the ferocity of Friday's move and the distinct lack of any buying power was interesting to me because it made me think I must have 'missed' something.
If you have been following my daily updates you will know that I was expecting a short-term high on about 31 August or 1 September to coincide with the major arm of the red T structure.
Something was holding up the market, and that something is often a longer range T structure.
And so back to the charts and zooming out:
What we can see is that the combination of 3 large T structures have been working together, to produce the recent rally into the mid July highs. And that there is, I believe, a direct correlation between the May high in 2015, the centre of the very large T structure of the January 2016 collapse, and Friday's 50 point drop.
So of course, the question on everyone's mind is 'what's next?'
The red T structure is still active and points to a recovery to highs (not necessarily new highs) in the mid-October time after perhaps some volatile days in the coming weeks.
Strong support exists just below at 2105-10.
And a new large T structure is under construction…
Be prepared.
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