Growth likely to weaken further into early Oct vs Value

The minor snapback Wednesday wasn’t unexpected given historical data concerning trading activity directly following a 4% decline.  However, Tuesday’s huge downdraft looks to have paved the way for an upcoming break of September lows which should occur over the next 2-3 weeks.  Volume was concentrated very heavily into downside issues which generated a very high ARMS index reading.  However, my own experience following downside reversal days following a bounce is that they tend to be far more bearish than bullish.  My own Elliott interpretation has a base case projection for weakness into early October and a possible $SPX decline down to a maximum level near 3685.  This would accomplish something important. It would allow this most recent wave lower to mirror the decline from mid-August in both price and time.  Such a decline over the next few weeks should form a trading low in early October.

Treasury Yields look to have another three weeks higher

Interestingly enough, from a DeMark perspective, this rally in yields is lining up exactly with the timeframe of early October, just like the Equity cycle we’ve been discussing. 

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