Everyone Is Getting Impatient

With the market invalidating the most bearish count I was tracking, it seems that everyone automatically assumes that the pullback I expect will happen immediately and easily allow for everyone to buy into the market for a rally higher.  Well, that is not how if often works.  The market does not always make it that easy.

First, the market does not have to automatically pullback after it invalidates the bearish count in order to give you a buying opportunity.  Rather, it can still extend higher, and I would almost prefer that.  Keep in mind that the higher this a-wave travels, the higher the c-wave will likely take us.  But, it does not mean we will be going to 4800+ directly without a pullback. In fact, due to being asked that question so many times, I had to write the following alert I sent to members in the trading room today:

“While everyone keeps asking me if we are going to the 4800+ region directly, my answer is STILL:  IT IS NOT LIKELY.

Just so you can understand my perspective a bit more, the larger this a-wave extends, the higher we will likely be going in the c-wave.  Moreover, the 5th wave of this c-wave can rally all the way to the 4700SPX region and still be considered the a-wave. You see, it is not uncommon to see a 5th wave be the size of .618 of waves i-iii, and that would point us as high as the 4700SPX region. 

Furthermore, I have no REASONABLE structure which would be pointing me to my minimum target of 4883SPX without seeing a b-wave pullback first.   While I can always be wrong and the market can take the less likely path, I still have to go with what I see as most likely.

Now please stop asking me that question.  (smile)”

So, let’s try to maintain a bit more patience and allow the market to complete this a-wave rally.  

As you can see from the attached 5-minute ES chart, we have reached our initial ideal target for this wave v of the [c] wave of the a-wave.  And, since the market dropped EXACTLY to the 1.00 extension (and common support for wave [iv]), I am leaving the door open for a higher wave [v] before we complete this v of [c].  

Now, here are our parameters.  Clearly, today’s pullback low is going to be a near term key inflection point going forward.   The next time we break below it will provide an initial indication that a top has formed.  Of course, I still need to see a break down below 4546SPX to make it more likely, with a follow through below 4500SPX placing us squarely in what I am expecting to be a corrective b-wave pullback.

In the meantime, as long as that 1.00 extension low holds in the ES, it does open the door for an extension deeper into the larger degree resistance box noted on the 5-minute SPX chart.

So, let’s try to have a bit more patience.  I still think we get a corrective pullback before we rally to 4800+.   But, until we take out today’s pullback low, we do not even have an initial signal that it has yet begun.  We still could extend further up towards 4700SPX before this a-wave completes.

Avi Gilburt is founder of ElliottWaveTrader.net.