The S&P pushed higher today pushing the Dow to a new yearly high, confirming the rise in the other major indices. This erases any possible intermarket non-confirmation that would have supported the bears if the market were to have turned down while it was in place. The market looks strong when looking at price only, and there's no real signs of that rally derailing at the moment. However the wave count shows that this market might be completing a 5 wave advance from the 1045 area. I'm not in love with this count at all, especially the way wave 1 and 2 are shown and that wave 1 is incredibly small compared to wave 5 which is an extended 5th, but it's the best possible view in my opinion. The market is very overbought on several different levels, and with the wave count finishing up, at least a short term decline is way overdue. That decline will help me determine the larger trend.
S&P 3min Chart
The above chart shows the late day decline counted as a 5 wave drop. This count is not perfect, and it's such a small timeframe, so I don't give it much confidence at the moment. I just wanted to post it as a possibility, and for something to watch as we move into tomorrow's trading. If we get a nice 5 wave drop tomorrow while holding today's highs, then it will really get my attention.
S&P Alternate Bullish Interpretation
This chart is one of the reasons I'm not too confident in the bearish 5 wave drop count I posted just above this one. The late day decline today can also be counted as an ABC affair, which is just a correction, meaning that higher levels are right around the corner.
So what all this stuff mean? Tough to say at this point. It's been extremely disappointing to have several fakeouts to this market crash over the past few months, and we just had another one to add to the pile. But catching a possible decline that's the biggest of the past 100 years will not be easy of course. I was hoping that if we did make new highs this year on this rally, that some indices would lag behind and not make new highs, creating a divergence between indices that often accompany major tops in the market. That didn't happen. All the major indices have confirmed the rise and are looking "strong". So I really don't see anything big time bearish at the present moment. We'd have to look back at the 2007-2009 5 wave decline for the bigger bearish picture. That 5 wave drop is yelling at us elliott wavers that larger trend is still down. The hard part is determining when it will resume that downtrend. Right now I see no evidence of that happening, and I don't want to get my account blown out of the water hanging on too long and getting "faked out" time and time again. I'm not abandoning the bigger bearish picture, I'm just presenting the data to you as I see it. I don't see any evidence of the large decline on the horizon. But maybe that's exactly the contrarian setup we need for the top to actually happen. We'll see. I'm not putting any new money to work though until I get some kind of confirmation of the larger trend.
The bottom line is that I remain neutral until I see more of the structure unfold.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.
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