The S&P was unable to reach much beyond the 61.8% Fibonacci natural resistance and retracement level (from all time peak in September 2018). In addition, Friday finished off a Red 2-day candle, the first down candle in a month. Fibonacci + new red candle at the end of a string of blue counter-trend candles = a high probability of more downside to come. This is a recurring pattern in technical analysis and it's right more often than it is wrong, but like everything else, it's not perfect. So we look to other confirming (or negating) evidence.
Below, I've drawn the 25,000 level on the Dow Weekly chart and have pointed out before how important 25,000 is in demarkation of the bearish/bullish future for the market, i.e., bullish above, bearish below. The Dow's oscillation above and below this price level buttresses its importance in the grand scheme of things and the longer it oscillates, the bigger the move coming either above or below it. Before we go on the the next chart, the most compelling chart and pattern of the weekend, take in this chart below and in particular, last week's bar on the far right:
Below, I open up last week's weekly price bar to see what's inside, looking to see if anything can be gleaned from internal patterns (lower time frames) that make up what outwardly looks like pretty bland bar, one that itself oscillated both above and below 25,000. Within that weekly bar is this 15 minute price bar chart that culminated at Friday's close, just above the 25,000 level:
Stair-step price series down, a series of Waves 1 and 2, with lower lows and lower highs that will ultimately develop into a five wave impulse pattern to the downside.
That is my, "on first glance," analysis of this very short term chart. Simply said, if the Dow can stay above 25,000 the bullish case is in play. The further above, the stronger the bullish case. If it cannot stay above 25,000 and falls below, the bearish case is in play and the further below 25,000, the stronger the bearish case. Wednesday to Friday's near picture perfect stair-step decline into Friday's close is compelling evidence that 25,000 will be breached to the downside. Add to that fact that the market dived deep below the 25,000 level into late December and has now retraced a normal 61.8% of that three-month and 20% drop down and the pieces are coming together suggesting an imminent, if not already just begun, new leg lower.
This kind of pattern recognition analysis is a mix of my dummied down take on Elliott Wave theory, striping this esoteric market theory down to its simplest forms and not stopping the simplification until all that arithmetic and geometry come together to do more than just draw a few lines; that they come together to make predictive sense.
In other words: Above 25,000 good, below 25,000 bad.
My aim is to put down on paper what I see and what I feel in the best and simplest way. - Ernest Hemingway
There are now 34 days left until March expiration. As recent trades (WFC and X puts) illustrate, it can take as little as one day to make a minimum gain of 35%. The pink shaded row (AAPL) indicates a 75% stop being hit.