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Stocks and the S&P 500 Index crashed on Friday in the index's sixth-worst one-day point drop ever, however given we are coming from 2880 plus in percentage terms it was 'just' around 2.50% . To put that in perspective, its a minor bump from a 30% rise. Perhaps. Its all a matter of entry and leverage.

SP 500 recalc from 3 8 2 3 18

Where did the bulk of people get in? What triggered the crash? Was it the fact we were already sliding into the jobs report and it signaled more high interest rates? Was it the dow components Chevron, Exxon and Apple who all sold off after earnings?

All factors no doubt but technically we can see how overbought we were from our charts and as confirmed from our short entry and +3/8 Murrey Math on our S&P 500 240 chart last week and confirmed across multiple time frames and indices, namely the Dow and Nasdaq 100. Note also in our chart above we have since recalculated down to 7/8 - a full 4/8 recalc.

Throw in the record low cash levels, low put call and vix and the herd mentaility of the only way is up. Technically the time was ripe, our crowd behavior measures had been flashing red for months. This impulsive was inevitable, but when? 

Friday's S&P or ES Futures Settles

ES Futures Close 2 2 2018


Lets keep it simple, use the Murrey math grids and ichimoku indices for support and pattern breaks and targets. Its early days this may be like 2008, but probably not, use your guidelines. Was that a 3 or 5 wave at the peak? The impulse confirms the topping, but what degree? Crucial is managing the herd and the algorithim probabilities. We watch for three waves for degree and failure. For those that shorted at entry, use your Murrey math levels and Fibonacci retraces. 

 SP 500 daily 2 3 18


What we do know in this bull run is everything has gone further than anyone expected, both ways. Be vigilant and notice capitualation and fear and greed resolutions. It does seem that Janet Yellen couldn't have timed here exit more poignantly.

SP 500 weekly 2 3 18

Trade Smart KnovaWave @knovawave

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