If the above count is correct, Minute wave ((v)) can complete at any time, but more importantly it would mean that Primary wave ((2)) may complete at any time as well. Along with the internals, momentum is also diverging during this 5th wave as you can see from the RSI on the daily chart above. A nice one or two down days should drop the RSI and confirm the divergence. I see no signs of a top in place now, but it can happen at any time so I’m waiting and watching closely. The decline that occurs after the top should be large and strong, whether or not it’s Primary wave ((3)) or not. So I feel the best opportunity ahead is for the bears to look for positioning, and that the bulls should be taking profits here.
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Despite the Dow and S&P’s two up days lately, the higher risk indices are not following along. The Russell 2000 small caps and XLF financials ETF have both had two fairly big down days in a row. So behind the scenes we see the internals are looking bearish and the higher risk indices are starting to falter. So the signs are there that a big selloff is coming, it’s just a matter of when. We’ve seen this before though, where all the signs are there but no confirmation occurs and we end up with higher levels for quite a while. So I don’t want to jump the gun, especially when it might hard getting a selloff during the holiday season here. But as long as the signs are there, we should be mindful of them, and be ready to strike when the opportunity presents itself.
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