The downtrending ABC pattern shown is clear enough that we should have expected more of a bounce from each of the two Hidden Pivot supports circled in red. When Hidden Pivot targets give way this easily, it implies that the underlying trend is likely to continue and may be about to accelerate. This is notwithstanding short-squeeze rallies such as the one yesterday that gave fleeting (and deceptive) buoyancy to the broad averages. Be aware, however, that an even nastier decline in January gave way to one of the most relentless bull runs in memory. Like the current selloff, it generated a bearish impulse leg on the daily chart. Is this likely to happen again? My very strong feeling is that it won’t — that the current weakness is the nascent phase of a very powerful bear market. Even so, we should keep an open mind when stocks rally. At the moment, the Dow would need to leap 436 points without a visually significant correction, surpassing a 16757 ‘external peak recorded Friday on the way down, just to turn the hourly chart bullish.
