Good Morning:

• Later today, I will present some Subscriber information from the weekend.
• We are now using Friday’s high and low as a potential breakout range (3853-3904).
• The 10-day wave is trying to turn here, which may explain a pause in the downtrend.
• The chart does not look encouraging for the bulls. 
• Still, I am asking myself why prices have not fallen significantly lower, given how bad economic conditions have deteriorated since the 3639 low in June.
• Are the weak economic numbers driving hopium again that the Fed will pivot?
• When you think you know what the market will do (like a crash), it often does the opposite.
• For example, there is a double left shoulder that formed in June and July on the chart above; might prices duplicate the same pattern on the right side of the chart? The pattern would predict one more rally.
• Junk Bonds and the VIX show positive divergences – not what one would expect going into the Fed meeting on Wednesday. The Put/Call ratio remains extreme – telegraphing a rally, not further declines. Shorts need to be careful here.
• Stay focused on Friday’s candle breakout (whether up or down).
• Support lies at the 3800 roundie (also rising trendline support), then the July low at 3723.75, and the June low at 3639. Resistance lies at the five-day line (3916) and on to 3950.
• If the wheels come off the bus, we will be looking to cover our short position and potentially go long. We may cover it anyway today, looking at the positive divergences. If so, we are not so sure it justifies a flip back to long.
• Maybe the price is consolidating in a triangle pattern?
• Be patient – even if the market puts in a low here, the bottoming process can be lengthy, often taking a few weeks with retests.
• It is scary out there, as it usually is near a low. But the contrary move is a rally.
• And then there is the Fed interest rate decision on Wednesday…
• Were it not for the abysmal leadership from Democrats and Republicans in Washington D.C., at least there would be hope and a prayer.
• The bear is alive and well, but the rally risk is increasing and not what most participants expect.

A.F. Thornton