A Re-Ordering Of The Counts With This Continued Push Higher

Today the SPX continued to push strongly higher and came within a few points of testing the previous high at the 4595 level that was struck on February 2nd. This push higher also exceeded the standard resistance levels that we look to hold for a wave (b) retracement. We had been of course looking for the SPX to be tracing out a wave (b) off of the February 4th low which should have been followed up with a wave (c) down to finish off the larger wave (c) of v of C of (4). So while we have yet to make an official break of the 4595 high this has moved high enough to where I can adopt the previous blue count as the primary count and I am now showing this in green. I have changed the previous green count to blue and am still going to allow for it to play out as long as we hold under the 4595 high.  I am however not viewing this blue count as highly probable at this point in time. Finally, the new alternate count is shown in yellow and would suggest that we still would need to see a larger wave c down back towards the January lows before the larger wave (4) is completed. 

Under the primary green path, we can view any break of the 4595 SPX high as a potentially full and completed five-wave move up off of the lows in the form of a leading diagonal. Now because all of the subwaves of a leading diagonal take the form of corrective three-wave moves the wave v should also take that three-wave form. While we do currently have three waves completed into current levels from a proportional standpoint this would look better to still see a push higher closer towards the 4700 area before the wave v of 1 sees a top. Once we do top in that wave v of 1 of (5) then we should see a corrective pullback for a wave 2 that likely would take us back down below current levels before this is ready to make a sustained breakout higher in the wave 3 of (5). I do want to caution however that because we are likely dealing with a diagonal until this finally does make a top in the wave v of 1 the action as we push higher is likely going to be quite sloppy making it very difficult to track on the smaller degree timeframes. With that said as long as we can maintain over the 4470 level I am going to give the benefit of the doubt to the green path and will be looking for this to round out the wave v of 1 over the next several weeks. 

If we were to break that 4473 level before we were to make another higher high and we were to see a very clean five-wave move to the downside then I still would have to allow for the blue wave (c) of v to be taking hold but again I am not viewing this as highly probable at this point in time and as soon as we break over the 4495 level on the SPX this blue count can come off of the charts.

The new yellow alternate count would suggest that rather than this move up off of the January lows being a leading diagonal for a wave 1 we are instead seeing a larger wave b of (4). Under this yellow count, we should see a push higher up towards the 4700 area which would then be followed by a larger wave c of (4) down back towards the January lows before finding an ultimate bottom. As of right now, the structure is not terribly supportive of this yellow count but if this does continue to extend towards the 4700 area and beyond it may become a more likely scenario. For now, however, it will simply remain an alternate count and I will look towards the green count as the primary path forward. 

While this action into and off of the January lows has been quite sloppy and difficult to track that sloppy action is certainly fitting the personality of fourth waves thus giving us some confidence that this will ultimately push higher in the larger degree primary count as part of the larger wave (5) to new highs. We will however likely still see several more weeks of sloppy and unreliable price action before we have the all-clear sign that this is indeed ready to push directly to new highs regardless of which path this takes. So until we begin to see this break patients and nimbleness is going to be the name of the game.

ES 211 30m
ES 211 30m
SPX 2912 60m
SPX 2912 60m
Michael Golembesky is a senior analyst at ElliottWaveTrader covering US Indices, the US Dollar, and the VIX. He contributes frequently to Avi's Market Alerts service at EWT while also hosting his own VIX Trading service.