Yesterday I mentioned a possible break to the upside on this cyan channel and it seems to have happened. We may see the same thing we've seen recently which is USD strength along with equity strength. However, that positive correlation, I think, is unwinding into negative territory. Took a small short position at the close today via SPY puts.
The Dow is in statistical second wave range. Statistically, most second waves retrace 50%-61.8% of the first wave in value and time. This is where statistically most second waves end (marked in the oval). From historical data we know that:
- 12% of second waves retrace less than 38.2%
- 73% of second waves retrace between 38.2%-61.8%
- 15% of second waves retrace more than 61.8%
Dow and S&P mini futures both resemble an ending diagonal, a common way to end a fifth wave.
