Thursday, August 27, 2015

Wave 5 Down from 1969ish to 1828ish Imminent?

SPX has rallied slightly above my projected 1953-1969 range. I am thankful for a better exit for my longs and entry for my shorts, but I believe the rally is nearly over. The 2 likeliest targets based on the candle pattern research were the previous pivot or candle high. That was 1954 or 1971. I surmised that something below 1971 was more likely, but 1971 +/- is now in play (even 1980 or 1990 wouldn't be much out of the norm especially in such an extreme technical situation). All but 1 of the 8 candle samples approached a key moving average such as the 13SMA, 20SMA, 50SMA or 200SMA but that 1 was similar to today in that the drop was large and swift below everything. The lowest MA is the 13SMA near 2020 probably falling to 2010 tomorrow and 2000 Friday. That seems a little too high for a wave 4 but not impossible. So, I still favor 1969ish as the top of this rally, but there is a small chance it will stretch to 1990 or even 2000+ without eliminating my near-term projections.

It looks like SPX needs one more high to complete 5ofCof4ofCofW from the top. Basically, a 3-3-5 wave 4 flat would look better with a 10-20+pt pullback from the morning 1972 high followed by a new high. If 1972-1980 ends up being the high of this rally, the likely Fib range for a low is still in the 1800-1840 area, but I plan to make more precise estimates once a high price is more solidified. Good fortune.

P.S. Tough call if SPX needs one more wave up but it reached my next level above 1969 at 1990 and has now fallen back to 1955. Either way, you know I'm positioned short and planning to stay that way below 1867. I have various Fibs and multiples at 1819-1851 and there is an OEW 1828 pivot plus the old 1820 high, so I think anything between 1800 and 1850 are fair game. Below that, 1735ish and 1670ish are in play.

P.P.S. 5PM EST: SPX did rally up one more time in a 5th wave, so it has done enough to complete a 3-3-5 flat from 1867 but could shoot up a little higher. Keep your seat belt buckled. This volatile ride ain't over yet.

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