mcm daily market update 3.Oct.22

Main trend: down

ST trend: down

On Friday the market managed to stage a nice bounce back to the 3680ish zone before failing and flushing to new lows. I mentioned that bears are in the "pay me now or pay me later" camp as the move into the lows looked incomplete and the new low confirmed my view. The sell was pretty relentless in the 2nd part of the day and RTH closed near the lows.

The bigger problem for bulls is that price was rejected at macro-ML and they lost ML quickly after that too. Which confirms the conclusion that the trend is still down, as bulls are unable to hold any support on the way down. the up moves are just DCBs to shake off bears, but once the selling resumes, supports are broken with ease. As we had a down squeeze on Friday, a ML back-test would be normal. We already had a shallow one in the o/n and it might very well be that's all we get.

In the bigger picture, not much changed vs our Friday post. The move off 3737 is still a 3-waver. Friday's bounce was simply completing wave 2. So again bears can say "pay me now or pay me later". From an EWT perspective, bulls have some near-term options, including the presumed wave 2 becoming more complex (therefore needing another bounce to 3680 area before back lower) or even this move off 3737 being part of the prior (larger) wave 4 and needing a pretty direct bounce to 3740-3750 area. I do think that's rather unlikely, but in case bulls clear 3700, then it would start being more likely. The bear option is pretty straight-fwd. Gap down that goes directly lower to finish wave 3, then DCB for wave 4 then final wave 5 flush.