RNLC - US Large Cap - & S&P500 This is a very bearish outline for the market.
If we look at RNLC - the US Large Cap Select ETF then it is showing head and shoulders with a pair of longer-term RSI divergences.
I believe this could be an indicator of where SPX is going in the near future.
SPX itself is showing a rising wedge that appears to be forming right where the head and shoulders on RNLC is.
There is what appears to be a messy very-long-term RSI divergence in place as well along with a messy fledging short-term RSI divergence.
I'm waiting for a good entry sign, but I think what we are witnessing is a B Wave higher (a bull trap in non-technical terms)
I suspect RNLC may lead SPX to a certain extent. So I will be using it as an indicator here.
In elliot wave terms, I sketch out the following and feedback is welcome.
My suspicion is that we have seen a leading diagonal move down from the Jan 2022 highs (rather than a regular impulse). This form allows for overlap of 2 and 4 (which is a no-no in regular impulses).
I also suspect that the bounce from the October lows is an ABC up, and the bounce from the March lows is actually a wave 2 up.
It's all one big trap-within-a-trap.
I have no idea of the catalyst yet... but of course, catalysts are only usually visible with 20/20 hindsight.
The technicals are what they are and I cannot ignore them.
I would set 2900 as a conservative downside target here, but I actually have no idea of the total downside potential. The 2000-3000 range is where many other analysts are placing their targets, so I think it's important to not get too greedy or buy-in to the narratives about total economic collapse.
This would constitute 100% of the move from the 2022 high.
I am already short a couple of stocks and I have an short against the SPX itself... and if the short-term wedge breaks I will certainly double-down on my positions.
Trade carefully and more updates soon.
