The “Distribution Arc” pattern I highlighted at the beginning of January has indeed played out to the full target levels.
What now? Let’s quickly update our key levels on the weekly chart of the S&P 500, Dow Jones, and NASDAQ at the midpoint of January 2016.
Here’s the S&P 500:
First, take a moment to review my January 7th post “Distribution Trendlines and Arc Targets for S&P 500.”
I highlighted this pattern in more detail for Afraid to Trade members as we shifted our narrative to the bearish/defensive side as January began.
Now, we see the downside “spike reversal” and arc trendline target achieved. We’ll update our plans and adapt from here.
The S&P 500 had a downside “spike” target near 1,870 which was attacked this morning with the gap.
Further downside selling – and a true Distribution Top – would target the 1,800 level.
Use the current level as key weekly pivot target and play the departure away from this spike low.
Here’s the Dow Jones Industrial Average:
The downside target for the Dow Jones Weekly “Arc Trendline” pattern was the 16,000 level which also was achieved today.
Like the S&P 500, play the ongoing departure away from this level, be it a bullish intervention bounce (like the prior examples) or else an ongoing collapse down toward 15,500 and 15,000.
The NASDAQ just achieved a similar target:
The NASDAQ completed its “Arc Trendline” pattern down toward the 4,400 level which is a key price pivot as highlighted.
Ultimately if the market continues under this major weekly target, it is likely to continue falling to lower targets including 4,000.
Use our current levels as key objective pivots and plan/adapt your strategies from there on the departure away from this newly achieved target level.
Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.
Corey Rosenbloom, CMT
Afraid to Trade.com
Follow Corey on Twitter: http://twitter.com/afraidtotrade