SPX Update

The general thought remains the same.

It is possible that the October low was the low, and we’ve had a big rally, and we’re retracing that rally in what will become a higher low, before heading much higher later this year. If that is a 1-2 in intermediate (orange) degree, that “2” should be an A-B-C in green, and we may have entered the green C.

If that’s true, one way it can unfold is with green C and green A being equal in length, and it might get us down to 3678, like this:


The green C itself should be composed of 5 blue waves, and I don’t know where to put those yet. I will discuss a few options below.

But, before that, note: I am not married to the bullish view. I’m not perma-anything, despite much of Twitter assuming that I am (though I was too bearish for a bit too long in 2020, I freely admit).

If we are going to have a market collapse, a magnificent VIX spike, and the whole nine yards, we can certainly do that from here, just as well. But, at least for the time being, both the bullish view above and any of a number of very bearish views will all look the same for now. They will all produce a big impulse wave down from here.

So, let’s see. If folks get too bullish on the way down and adopt my view, I will become suspicious, etc. We’ll look at those things once we get there.

But, for instance, what does this rejection of a multi-year trend line on Apple mean?


It might be very bearish that it did that. Don’t know. So, I won’t dismiss super bearish stuff, but for now, let’s see how far we go (assuming we keep going lower from here) and what it looks like as we do.

Alright, let’s zoom in a bit on the S&P. I don’t have any short-term grand ideas; I just want to discuss a couple of things.

What we would like to do is to identify the 5 blue waves that should compose green C. For now, I have slapped it on here at the orange box below, which is the 50-61.8% retracement of this year’s rally:


That’s a common place for buyers to step in and for short sellers to cover.

Now it is possible to count today’s price action in a few ways. There sort of is a 5-wave pattern already. And if we bounce straight from here, it could be this, coming in much earlier than I’d like it to (the 5-wave count we can see is in the minuette [orange] degree, the last of which is pointed to by the green arrow):


That may work, it does look like 5 waves, but I actually don’t see good fib relationships between those orange waves.

Because of that lack of balance between those waves, it could be that we’re still in the middle of something. Maybe we’ve done a 1-2 in minuette (orange), a 1-2 in subminuette (red), for instance. If we gap down, it could be this:


And there are other alternatives as well. So, I think I will need to wait to see a bit more before I can hazard a guess about the nature and location of blue 1.

And finally, the selloff looks good so far, and happened about where I wanted it to. We never gapped over the 200-day, which inclined me to think we weren’t going to keep it, and we haven’t. But, keep in mind, if something wild happens and we actually do end up gapping over it, there is a possibility that the market is very bullish, like this:


So, I am inclined to the view presented at the opening of this post, but am aware of some alternatives. Let’s see if tomorrow can help us to see where we’re at within blue 1, if we are in that.

Have a good evening.

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