As mentioned in my last report, we had a final peak projection for the Large gray Election low T structure for 27 February – actually 28 February because I forgot about President's Day. At that time it was unclear whether the market would selloff a bit first, but a linear move was expected into the endgame of the Large T structure.
On 9 February we saw the market break upwards through the previous peak at 2300 and accelerate towards a series of projected resistance lines at the upper extreme of the trading channel and this target has now been acheived during the last few days.
I pointed out to my readers that the 9 February move was creating what I refer to as a Cluster T Structure because the T volume oscillator was breaking upwards through a cash-build up line and generating a strong Buy Signal. The Cluster T structure is created by a series of similar lows in both price and oscillator and creates a number of different possible projections. I have drawn the red and blue possibilities but other positions are possible. Interestingly this situation produced the possibility for an extension of the large T structure into March and April.
We are now peaking in line with the final days of the Large gray T structure, and this could mean a top occurs in the market on 28 February or thereabouts (+ 2 days – the oscillator low is 2 days before the price low and recent peaks have reflected this).
During the last 2-3 days we have seen some significant weakness developing in the oscillator and this represents a reduction in the Buying Power within the market. This is also hinting that we may be close to an important peak and we should watch it carefully because it is potentially cancelling out the extended arms of the Cluster T structures.
In my mind there are 2 possibilities to consider:
Either the market is about to peak inline with the end of the gray T structure and then turn down into a new important low before making a completely new T structure at some point in the future. In this case the Cluster T structures are no longer active and the oscillator continues to drop and price makes a Cover Signal.
Or the market finds renewed strength and continues to move higher inline with the Cluster T structure(s), perhaps after a few days of weakness associated with the end of the Large gray T structure. In this case the oscillator starts to recover, and price continues on a Buy Signal.
We watch the oscillator for clues, but we use price as the leading indicator.
Be prepared for what is coming next.
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