SP500 ~ price has reached the area that will determine the long term bear or bull wave structure...


Back from vacation and it doesn't look like I missed much. One thing I learned long ago was that if I wanted the market to do something I was waiting for...all I had to do was go on vacation and it would happen. I'm not sure it worked this time.

The long ascending sideways rally just keeps going and it's hard to count any wave structure with absolute certainty.

The 30 minute chart shows a five wave structure with a possible diagonal wave-v of (v) of [c]. I don't have much confidence in this particular count and I'm showing mainly to try to align it with the NQ...which by the way made a new all time high today. What a major divergence with the other indices! Are the other indices working on 5th waves to new highs and just lagging behind? Or are the divergences showing us that this is wave 2!

The problem with the diagonal in NQ that people are overlooking is that the third wave is the longest. By diagonal rules this shouldn't happen...the third wave shouldn't be the longest or the shortest.

In the case of the SP...the diagonal works for now but with another high above 3133.00 then the third wave will be the shortest. For now, the diagonal is even displaying a small throw-over of the upper channel line which is needed to qualify as a diagonal.

Another point for the diagonal is that the MACD follows the diagonal and even though the price move has been substantial...there is huge momentum divergence with the wave (iii) showing the peak momentum.

Yesterday's high tagged the center channel line and also came very close to the 78.6% retracement of the entire Feb to March decline. However, today's sell off looks corrective and found support on the lower channel line which looks like another high coming that will destroy the diagonal theory.


The 100 minute chart is labeled showing the most popular count. But, once again traders are forgetting to measure because with another high wave (iii) will be the shortest.

Two situations the markets are dealing with is, first for the bears, the wave 2 correction scenario. By design the wave 2 rally, especially at this degree, is to force as many bears to turn bullish as possible. This can be seen by the fact that we have events like the virus, economy, China and riots going on and the market is ignoring all of it. As the market grinds higher
all we have to do is read or watch TV to know that everyday more and more well known traders throw in the towel and claim they've turned bullish. So, the wave 2 is accomplishing what it's suppose to do...go up higher than anyone thinks on bad market internals. When we least expect wave 3 will begin!

The second situation we deal with is similar but for the bulls. Fifth wave rallies, especially at this degree, always take place on bad news. I don't think that piece of Elliott has ever been more apparent than now. Price goes up daily after getting more bad news which does fit perfect for an "intermediate" wave (5) to new highs.

Tomorrow we'll be watching for invalidations of the wave labels discussed above and then label the alternate count which we like better anyway.

Follow the Trend
and
"Trade Safe"

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