Don't be fooled.
Yesterday, at 3:25 pm, in our Live Member Chat Room, I said we are very likely on the way to 2,700 on the S&P but, before that happens, we were very likely to get at least a weak bounce:
I think we'll have to wait for 2,700 on /ES. If 2,850 is halfway down from 3,000 (5%) then we're looking for 30-point weak bounce to 2,880 and strong would be 2,910 but that's not likely if we we're heading lower so look for a failure at 2,880 and then follow-through below 2,850 over the next few days.
As you can see on the chart, we ended up just under 2,850 at 2,844 and this morning the S&P has bounced to 2,856 after falling to 2,775 overnight. That movement doesn't matter, what matters is how we trade once the volume picks up and our 5% Rule™ tells us that we should expect a 20% retrace of the 150-point drop from 3,000, so that's 30 points (green weak bounce at 2,780) and, if that fails, then it's very likely we are on the way to 2,700, which becomes a 300-point drop and then the bounces we expect double to 60-points (red weak bounce at 2,760).
This morning, the talking heads on the MSM are saying we are bouncing because China didn't devalue the Yuan as much as feared but that's not the real reason we were dropping, that was the White House spin on why we were dropping to deflect the blame away from the President and his idiotic tariffs and yesterday, the US branded China a Currency Manipulator – further escalating trade tensions and making it less likely we'll be coming to an agreement – there's nothing bullish about that.
In addition to the currency move, Beijing said that Chinese companies had suspended purchases of U.S. agricultural products, and that the government has not ruled out putting tariffs on U.S. farm goods purchased after Aug. 3rd. China’s Central Bank said Monday’s depreciation was “due to the effects of unilateralist and trade-protectionist measures and the expectations for tariffs against China.” People’s Bank of China Governor, Yi Gang, said that China…