So far the market has left its options open -or its intentions unclear if that’s your preferred view- with 2 potential counts:
- bullish: a set of nested 1,2’s (red intermediate i, ii; followed by green minor 1, 2 and then white minute i), or
- bearish: a set of a,b’s (green minor a?, b?; followed by white minute a?, b?)
Their implications are short term (days-weeks) different, but long term (months) the same. Namely the bullish options has the market reaching new highs rather soon, whereas the bearish options first seeks new lows (red “intermediate ii?” with the red arrows) and then we’ll get new highs. (click plot to enlarge)
There’s IMHO nothing in the charts yet that would suggest either or. However, since it is a bull market we’ll give the benefit of the doubt to the bulls (nested 1,2s) until proven otherwise. That otherwise is a trade below last Tuesday’s low (SPX 1992). Trade above Friday’s high cements the bull case.
Note that at the “minor 2?” / “minute a” low wave c of either of these two possible waves had a perfect 1.618x a relationship (see orange Fib-extension), measured from b. On the SPX we had a 1.382x relationship. This indeed suggests a 3-wave correction, although it does look like 5 waves. Hence, also here we have conflicting information that doesn’t tell us yet which way first.
Next I want to draw your attention to the red “intermediate ii?” with the red arrows. These are 3 Fib-extensions that come into play when/if the market decides to take the bearish route first. We can see that the green (minor) and white (minute) 123.6% extensions coincide rather well (at ~10,150). These suggest the first level to look for. Next, since these don’t align as well, are the 138.2% green and white extensions (at ~10,050). Last but not least are the green and white 100% extensions (c=a, at ~10,300). On the SPX we could see the 1.618x extension come into play since we’re in this case then dealing with an expanded flat. Target for this would be ~1920.
You’ve noticed, I’ve spent a lot of time outlining the bearish case. In the bullish case there’s not much to look for except much higher prices over the next several months. On the SPX we may very well reach the 2300+ area once all is said and done, based on standard Fib-extensions for wave v. Hence, as I’ve advised my members; keep the big picture in mind.