To say this has been a difficult market lately is putting it mildly. The other day I noted in one of the daily updates that I thought it was going to be a waste of time to try and trade this market with any kind of technical approach be it patterns, retracements, support and resistance, Elliot wave, etc., etc.
Here's my opinion on what I think is going on. The market is trying to rally. However the fundamentals are so rotten that there just isn't any way to justify a higher market. The chop over the last couple of weeks hasn't helped either. Traders are now too nervous to hold for any length of time. Not exactly conducive to a trend developing.
With all the government intervention traders have no idea if tomorrow they are going to come in and the rules will have suddenly been changed. Also not conducive to a trend.
On top of that we just witnessed a crash, of historic proportions, that originated from below the 200 DMA. That's pretty unusual. As I noted the other day we are still extremely stretched below the mean. So I think it's going to be tough to crash again from these severely depressed levels.
In order to get the next big leg down I think the market is either going to have to find a way to rally and close some of that big gap between it and the 200 DMA or we are going to have to continue trading sideways and let the 200 DMA catch up to the market.