After all this excitement, market might just go flat for a while
Updated
Traders, it is with a heavy heart I bring to you forecasts of protracted ranges to come.
Choppy and dull markets, lasting weeks or months. It's a sad forecast to make, but hopefully I am wrong.
Here's the chain of logic for it.
First we need to look at how markets typically recover from a bear move. Let's look at some of the main feature of the 2008 onwards recovery.
After this move, if you knew to draw a simple retracement fib it would have helped to know where the bearish continuation would be and it would also let you know when it failed (Using the basic 76 rules I speak about all the time in day to day trading - I use it because it works really well).
And once this was broken we'd head to the 1.61.
Into that 1.61 level we would be totally rocketing.
Then the market would go sideways for a long time. Finally turning into a 2 legged bear trap to retest the 1.27 of that fib set.
So, basically - if you knew to draw that fib and knew a few simple rules around the fib levels, it covered everything you needed in the 2008 reversal.
To the modern day.
First thing I should clarify if the 2008 thing wasn't fluke and I am not charting all this up now with the benefit of flawless hindsight.
This was something I was talking about in March of 2023 and at that time I actually covered most major recoveries since the 1920s.
And since that time, we've developed all the key features.
Now we're at the (All important) 1.61.
Major decision levels come at 1.61s of big drops. Here's the most recent ones;
From the 2019 drop, we head faked over the 1.61 and crashed (Very typical of a 1.61 rejection).
In 2021 it broke the 1.61, used it as support and then ran all the way to the 2.20 before making the 2022 top (And if you seen me calling the top in real time - it was based on this fib).
These are possible paths for the 1.61 test. Now we're at it we might be on the cusp of some real action. Be it a reversal or a break - a strong trend could come from a clean 1.61 decision.
However, if we are in a classic 1.61 stall pattern, things are about to get really dull for a while.
And just to give you context on what a 1.61 pin can look like, we were pinned in the 1.61 - 1.27 range for a full year previously.
To make the range, bear trap and rally forecast is to make an aggressive bullish forecast. If this happened we'd likely trade over 7,000.
But if this particular setup is about to happen - we're soon heading into a few months of chop. A few months being relatively optimistic. Could be longer.
Might be chop, chop and chop for months. Not making a bear move but enticing bears in before it looks like it's stalled out. Getting far more people watching for the bear break - and then duly slicing them all up in the bear trap. Would make perfect sense from a charting and game theory type of perspective.
Awesome bear and bull trades would come out of this, but it'd be a dull period first. One of those situations where the best thing most people can do is keep their money and be able to use it at a better time (Be you bull or bear).
---
We can hope for the better trending conditions, and anything can happen at 1.61s - All I can say with a degree of confidence is a decision will be made here and it will be important.
There are variations where this means strong up or strong down- both of these are easy to make money in, we have to be prepped for the conditions where nothing big happens and you have to be very patient or very tactical to survive.
Beating protracted ranges is much easier if you have a sense we're heading into them before the fact.
Choppy and dull markets, lasting weeks or months. It's a sad forecast to make, but hopefully I am wrong.
Here's the chain of logic for it.
First we need to look at how markets typically recover from a bear move. Let's look at some of the main feature of the 2008 onwards recovery.
After this move, if you knew to draw a simple retracement fib it would have helped to know where the bearish continuation would be and it would also let you know when it failed (Using the basic 76 rules I speak about all the time in day to day trading - I use it because it works really well).
And once this was broken we'd head to the 1.61.
Into that 1.61 level we would be totally rocketing.
Then the market would go sideways for a long time. Finally turning into a 2 legged bear trap to retest the 1.27 of that fib set.
So, basically - if you knew to draw that fib and knew a few simple rules around the fib levels, it covered everything you needed in the 2008 reversal.
To the modern day.
First thing I should clarify if the 2008 thing wasn't fluke and I am not charting all this up now with the benefit of flawless hindsight.
This was something I was talking about in March of 2023 and at that time I actually covered most major recoveries since the 1920s.
And since that time, we've developed all the key features.
Now we're at the (All important) 1.61.
Major decision levels come at 1.61s of big drops. Here's the most recent ones;
From the 2019 drop, we head faked over the 1.61 and crashed (Very typical of a 1.61 rejection).
In 2021 it broke the 1.61, used it as support and then ran all the way to the 2.20 before making the 2022 top (And if you seen me calling the top in real time - it was based on this fib).
These are possible paths for the 1.61 test. Now we're at it we might be on the cusp of some real action. Be it a reversal or a break - a strong trend could come from a clean 1.61 decision.
However, if we are in a classic 1.61 stall pattern, things are about to get really dull for a while.
And just to give you context on what a 1.61 pin can look like, we were pinned in the 1.61 - 1.27 range for a full year previously.
To make the range, bear trap and rally forecast is to make an aggressive bullish forecast. If this happened we'd likely trade over 7,000.
But if this particular setup is about to happen - we're soon heading into a few months of chop. A few months being relatively optimistic. Could be longer.
Might be chop, chop and chop for months. Not making a bear move but enticing bears in before it looks like it's stalled out. Getting far more people watching for the bear break - and then duly slicing them all up in the bear trap. Would make perfect sense from a charting and game theory type of perspective.
Awesome bear and bull trades would come out of this, but it'd be a dull period first. One of those situations where the best thing most people can do is keep their money and be able to use it at a better time (Be you bull or bear).
---
We can hope for the better trending conditions, and anything can happen at 1.61s - All I can say with a degree of confidence is a decision will be made here and it will be important.
There are variations where this means strong up or strong down- both of these are easy to make money in, we have to be prepped for the conditions where nothing big happens and you have to be very patient or very tactical to survive.
Beating protracted ranges is much easier if you have a sense we're heading into them before the fact.
Comment
We've ripped off support with SPX back close to the high. 
This is all still possible inside of the model proposed here. There was the first hit of 1.61. The strong reaction. Dump to support. Rally. All of those happened in the example recovery too.
In a like for like, SPX may get to around 5670 and then begin to range.
Hopefully not - but it's still a risk. If that's the case then we'd be heading into the SPX high for the year.
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