Just wanted to say that I really enjoy reading the XJO thread. Thought I would also add my own two cents into current events, and assuming history might repeat itself, I don't think there would be ridiculous amount of downside from where we are today.
At the long term bull chart, we bounced off the 61.8% fib retracement around 4770 and are currently in the 61.8% to 50% retracement trading zone... for now anyways. Our weekly ADX is trending upwards with downside trend risk, but our RSI is closer to 30 so it is possible further downside is ahead, but I would assume if we broke the 61.8% we would have quite a bit of support around the 78.6% fib line around 4450 due to very oversold RSI.
Last time we fell from a bull market in 2008/2009 and we hit the 50% and 61.8% retracement, we kinda smashed straight through those barriers. At that point in time our RSI and ADX/DMI were roughly in the same zones as well. If we broke 4700, and history were to repeat, it would be likely we would consolidate around the 4450 level before the next leg up or down.
So we might see a further 8% fall/capitulation before some sanity prevails but a lot of downside I believe is already priced in. Market sentiment and news seems to be bear market this and bear market that, but we have already capitulated 20% from our recent highs and over 50% of the gains made over the past bull market. It would take something pretty calamitous I'd think to send us back to 4000 and below. Oil prices are already at rock bottom and are lower than 2009 lows (news we already knew for months aka. factored in), China isn't importing ridiculous amounts of 'boom time' commodities (news we already knew since 2012) plus their stock market bubble has already crashed and bounced from the 78.6% retracement level which looks like a short term bottom for now.
US economy is also in the process of raising interest rates, so I'd say this is just a normal correction to remove the froth and any bubbles. Fingers crossed it's just about over.
This is the first bear market I've been involved in from an investing point of view, it sucks seeing some hard earned capital get a bit smaller but if I knew what I know now I probably would have exited the market at the bearish RSI divergence and reversing ADX in February/March 2015 a month after I started haha. Ahhh well... twas young and seduced by the chance for profits! Good luck to all!
Good luck to all!
(20min delay)