I Believe the S&P 500 Remains Within the 3rd of 3rd, and Beware of This Previously Unsuggested Possibility

In line with main counts, we continue to rally. I do not believe we have completed the 3rd subminuette (red) wave yet. I will use cash here ($SPY) as I have some competing ideas on how to count nests in the futures for the time being. I would still like to see a gap in the middle of this wave, and perhaps we will get that tonight.

Now, as for targets, the minimum is the orange box for minute (blue) 3, but it is free to go higher for that wave. I won’t be able to tell yet, until we see a period of “congestion” that will suggest the fours and fives (of the various threes) are presenting. This may happen around the down trend line breakout (which would occur around the orange box), but it may also happen at higher prices (I’ve noted two other common fibs where blue 3 can go on the chart).

Now, under normal conditions, minute (blue) 5 is expected to top out at any price above minute (blue) 3, perhaps even going as far as the length of minute (blue) 1 in price, but in this case, I think we have many ingredients for a gamma squeeze presented to us. The market is very severely shorted here, it seems, and sentiment is at multi-year lows. And so it is possible that we squeeze very hard for minute (blue) 5, perhaps making it the wave with the real extension in it.

SPY


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If $ES Can Muster a Rally Today, Here’s What I Would Expect

I had been hoping for a nice big gap this morning, which would help to validate the bullish count by giving weight to the impulsive nature of the proposed count by giving us a probable 3rd wave. We’re not going to get the gap, but that doesn’t yet mean that we’re not impulsing.

I like the little breakout we’ve had last night out of the downtrend (red line) and present retest. This all could be a 1-2, and the red 3 could have it’s own subdivision, etc. It may also be the case that minute (blue) 3 will end up going much higher, giving us space somewhere between here and there for a strong gap. At any rate, I’ll have to see what today brings, but hopefully we begin moving up in price with some vigor.

[Administrative note: while cleaning out some non-renewing members, I accidentally removed a few of you from the private Twitter feed who I should not have. I have direct-messaged those of you affected on Twitter, asking you to re-request to join the private feed. Sorry for the goof—had not had enough coffee yet for that task, apparently.]

ES


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Setup Looks Good So Far on $SPY

Setup looks good so far for a 1-2 of minuette (orange) degree; we’re at a good fib for the 2 here (there’s an extra nest on futures because of the additional trading hours—if this count looks a degree off to you). But, I want to use cash here because of something bulls will hope to see. We want to see a gap to help us confirm that we’re in a 3rd of 3rd wave, and in order to do that what we don’t want is a “wall into the close.” We don’t want to slam right into the high of day at the bell. Why? Because those are often reversed the following day and thus, we won’t get the gap (it’s not always true, so even if that happens, don’t fret too much). And so: it’s preferable for us to rally in “power hour” for the subminuette (red) 1 (ignore where I placed it in price, I have no idea where it might go), but the hope is to then pull back slightly into the close, which will give us the red 2. If we get that, odds are better that we get the runaway gap on Monday.

SPY


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Counting Cash ($SPY) Still Looks Like a Clean Leading Diagonal

Taking out all the time-consuming overnight chop on the futures market and looking at $SPY, it still looks like a clean leading diagonal for 1, and we should be in the 2 now (which can go deep coming off of diagonals). This will invalidate below the mini-crash low:

SPY


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A Quick $ES Morning Brief

If they are accumulating here, they’re in a real hurry to not get us going anywhere so far. On the last count, in which I was expecting minuette (orange) 2 to be complete or virtually complete, I was then expecting a significant rally, which has yet to materialize; nevertheless, the count still works so long as the low from the 26th holds. As it stands now, I find it difficult to count everything from that low as anything but 5 waves up (green arrow) and 3 waves back (red arrow). But, if the market weakens, I will be forced to reassess.

I find such an outcome nearly incredible given the state of sentiment here, and from what I can tell regarding positioning, but price action is price action, and if we’ve done a 1-2-1-2 up, we need to move up in price sharply, and soon, and if we do not, then the bullish count doesn’t work and I will be forced to acknowledge that.

ES


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$ES Count Update: Minuette (Orange) 2

We got the deeper (overnight) retracement that I believe was minute (blue) 2 that I discussed yesterday and we seem to have a clear impulse wave up since then (minuette [orange] 1). We may now be in minuette (orange) 2 and I would expect some kind of 3-wave move that would typically retrace to the orange box. If we go on to make new highs before that, then we’re in a nest and we would expect higher prices sooner, rather than later (I offer this possibility because I know there have got to be a ton of stops above the post FOMC high and if we get there, I would expect a big squirt).

ES


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Member Request: An Update on $GOLD

A member has requested a look at gold, and so let’s do that here.

My last discussion of gold was in this post, and despite that being in an article exploring the possibility of deflation, whereas now I am more firmly inclined to believe we may reflate for a considerably longer period of time, the count I suggested in that prior article still looks good to me, and in past market melt ups, gold does not necessarily do very well. The instrument moves so slowly that there is no essential update from the prior count I proposed, though I have had to move a couple of trend lines.

I believe public speculation in the metals is at near all-time highs (suggested in part by the high premiums we are seeing over spot for physical). So long as the prior two highs hold (green arrows), I continue to lean to the view that this will eventually fail somewhat dramatically.

GOLD


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A Few More Comments for the Day

I just want to bring a few more thoughts together here. Yes, this could be a bear wedge on $ES instead of a leading diagonal:

ES

Read more “A Few More Comments for the Day”


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$ES Alt Bullish Count

An alternative count is to count this as one single structure, as a leading diagonal. This would help to alleviate the 3-wave problem discussed earlier (as diagonals are composed entirely of corrective waves). If this is a leading diagonal, keep in mind that they can retrace deeply (though I’ve marked the 50-61.8% which is also possible).

Just about everyone so far as I can see has been expecting to sell this and are being rewarded for that. I continue to have fairly strong doubts about that and think this may very well go in the other direction eventually (though I could be wrong about that of course).

ES


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Quick $ES Update

Few observations:

  1. We’ve gotten through the inverse neckline today, which is good
  2. We are backtesting that neckline now, and
  3. It’s a reasonable place for a nested “2” (green arrow)
  4. BUT: we have yet to recapture the green trend line that cuts across the screen (a bullish close might fix this)

So, if the bulls are going to take over, this is a good place for them to do so

ES


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