$SPX Evening Update

Carrying the thought from yesterday forward, the most obvious way to count this structure is as a “B-Wave triangle.”

Now, I had it counted as complete yesterday, but we haven’t moved down impulsively, so we can extend that structure to accommodate one more rally for the blue “e” of Green “B.” And if this is the way to count this structure, I would expect us to drop in an impulse wave, rally back perhaps into the CPI print, then have a monster dump in the 3rd blue wave down:


This is the obvious thing to do with this. Maybe too obvious. I don’t spend a lot of time on Twitter, but I made the rounds today and I was a little surprised. Yup, everyone, has this as a bear wedge. Everyone. I hate that. Now, we might all have this bear wedge for a reason, and maybe it is about to drop. But even my favorite perma-bulls out there are looking lower, and that makes me wince.

I hate being like this, but I just don’t like it when I see a strong consensus out there. It doesn’t always work, and it’s sometimes a bad idea to try to fade the crowd, especially if animal spirits take over, but in the spirit of just that, let me try to resurrect a bullish count (I gave a version of this in the Discord today). Note the orange “a” of blue “d” in the chart above.

What I need for a bullish count is to “end” on an impulse wave and then an impulsive rally. And maybe we can use that because that orange “a” wave is an impulse wave.

And so it’s possible that we do something like this:


In this case, the bottom of orange “B” (or it could be a “2”) has snuck up on us and we’re finally set to pump.

Zoomed in, we can do this:


So, I don’t know if this will work, but I like it because it’s difficult to see, and consensus seems to me to have swung too sharply to the bearish view. Might not work, but it is my preference to see the minority win: I like it when the markets are a meritocracy. But, a count like this can also help to explain JNK’s recent renewed strength, and Bitcoin’s reluctance to move lower.

Let’s see what it does. Because of the risk of an “e” wave and this bullish count, as discussed in the chat, I took back my SPY calls with some duration that I dumped near yesterday’s high and will keep the shorter-term strangle.

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