Is This the Mother of All Bull Traps?


On Thursday the SPX spiked through the top of a little declining tops line (green) — courtesy of a few mega-caps.

This came on the heels of breakage through the bottom of a larger rising bottoms line (red).

Will the real Mr. Break please stand up.

False up-spikes in bear markets are the normal expectation.

False shake-outs in bull markets are par for the course.

If we are in a Primary Bear Market, then the SPX should be carving out the big bull trap (trap the bulls).

Here’s the setup.

Trade above Thursday’s high TODAY will put the SPX in the daily Minus One/Plus Two sell positon.

This is because the 3 Day Chart is pointing down (Minus One) and two consecutive higher daily highs will satisfy a Minus Two.

360 degrees up from the March low is 4059.

450 degrees up is 4123.

A key 540 degrees up (a true square, a cube) is 4187.

This 4180 region ties to a backtest of the red Ghost Line.

Ghost Line because it’s been broken but may still exert its influence extending the line out where it may “haunt” the future price pattern.

Consequently, a Minus One/Plus Two sell setup in the 4180 region may be a big Bull Trap.

A big bull trap because of the entire structure since the January 2022 top and the Time Factor.

We’ll walk through this setup in Monday’s report.

Suffice to say that Intermediate Wave 1 down ended in October and Intermediate Corrective Wave 2 may culminate here.

It would be perfect of perverse of the Talented Mr. Market to complete a 6 to 7 month corrective Wave 2 with a false breakout prior to a powerful Intermediate Wave 3 drop.

Breakage back thru the rising green trend line is the first sign that this Bull Trap has been sprung.

This ties to the above 4123 “square”, 450 degrees up from the March low.

A failure back below 4059 (360 up from the March low) springs the trap for a possible doozy of a Sell In May.

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