SPX: still a mess, but should resolve soon

It’s been nothing but chop over the past weeks. Break below 1990, which was bearish was quicker than you can say “buy shorts” bought up back to the 1990s again. So, often chop is resolved to the upside in a bull market so let’s keep that in mind. But, there are still many possibilities on the table (click to enlarge):

spx update 09112014

  1. was SPX 2011 primary III? or
  2. was SPX 2011 minor 3, and SPX 1983 minor 4, now in minor 5 to finish Primary III? or
  3. was SPX 2011 only minor 1 of an extending intermediate v wave?

Let’s look at what needs to happen for each count to become the preferred count:

  1. price needs to drop to 1970s directly – starting tomorrow!- to keep the minor a-b-c count alive as price is now at the 62% retrace of the drop from 2011 to 1983, which is typical for a b-wave. It then should ideally bounce and then fall quickly to below 1950 and eventually below 1905. Until that happens we simply can’t be sure this count is correct. If price goes higher tomorrow, this count can be deleted.
  2. possible especially since SPX 1983 is a little more than a 23.6% retrace of the entire move from SPX 1905 to 2011, not uncommon for a 4th wave. Using the i and ii of the “a or i”, and “b or ii” labels suggests a target of SPX 2014 (1986 + 2.0x (1997-1983)).
  3. also possible, that would mean that SPX 1983 was a very shallow minor 2, and that minor 3 is around the corner. So far, what I have labeled as “a or i”, and as “b or ii” would then be the micro 1 and 2 to build a minute i wave: Namely, using these i and ii labels; the next wave up will target SPX 2014 (1986 + 2.0x (1997-1983)). This would then be minute i of minor 3.

So for now, option 1 requires a lot of bear-work…. Note that option 2 and 3 target the same SPX level, and the subsequent decline will tell us which one is correct: trade below SPX 1983 means option 2. A retrace from SPX 2014 to above 1983, followed by new ATHs means option 3. Simple!?!? 😉



3 thoughts on “SPX: still a mess, but should resolve soon

  1. Thanks !!

    I think, there is a typo in your last sentence. After reaching 2014, if SPX trades below 1983, then it means option 2 (and NOT option 3 as written by you). Similarly, retracement from 2014 to 1983 and then new ATH means option 3 (and NOT option 2 as written by you)

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