Now We Cookin’

My expectations yesterday that we may only just be entering the heart of the move still look promising today. I was hoping to see a gap and go, and we sort of got that, but it’s not yet quite the kind of gap I want to see to announce the 3rd of the 3rd.

And so, it possible that today was yet another 1 and 2 (of subminuette [red] degree):

SPY

If yesterday was orange 1-2, the target for that 3rd wave is the smaller orange box above us which is roughly the measured target of the bullish wedge (that last FOMC high on 5/4). The top of the large orange box is the 3.618 extension of minor (green) 1 and coincides with the upper rail of the bull flag, so that may be our destination for minor (green 3).

Now, if we are about to accelerate even more on Tuesday (I’d like to see a better gap), are there other technicals that can support this?

I believe that there are.

For starters, we are in a fib “No Man’s Land” at the close, between the 38.2% and 50%. I wouldn’t expect us to simply turn lower here regardless of whether the market is ultimately bullish or bearish here. In either case, we should touch something first.

SPY

And also, we cut through a lot of EMAs but didn’t close at any. And since we’re moving up, there’s little stopping us from continuing until we test either (or both) above us—the 60-day and 250-day EMAs. So, from this perspective, we have more room on our leash if we need it.

SPY

Also, the $VIX broke down from its “lesser wedge.” It can be crushed 13% lower to about 22 before reaching the next fan line below. There, it may wrestle with that fan line, and then the lower rail of the “greater wedge” (red), which would be consistent with the S&P entering the congestion we would expect with all the “4th waves” still above us.

VIX

Two other things.

The German $DAX‘s inverse head and shoulders (pointed out here) has broken out pretty convincingly. These are very powerful structures when they work. This can go to all-time highs faster than you might think.

DAX

Bitcoin looks risk-off here, like an arc of death:

BTC

But while it may look like it simply wants to break down here (bad sign for risk assets), it’s actually something it sometimes does right before major markups.

BTC

They look sort of like bearish consolidations, sort of like weird triangles, and just at the moment when they look like they will fail, whoosh. I’ve never really been sure how I’d like best to count them internally, but they’ve cropped up before and this may accelerate up from here like the others have.


In sum: I don’t think we’re done yet. Futures trade on Sunday night and halt—I think—at 11:45 EST on Monday, before reopening again for standard Globex. Lots of time to run us for a gap if they want to. Low liquidity holiday and all.

On Twitter today I said I intended to write two articles this weekend, but I will have to wait on the second one. It’s not time sensitive and I will need to observe a bit more before discussing the thoughts.


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