Has The Honey-Badger Returned?

I can’t remember the last time I saw this many heads being scratched as I did yesterday and today.   The news is clearly that there is no peace agreement, yet the market has rallied over 2% during that time.  In fact, it has rallied almost 3.5% off the overnight low struck on Sunday night, despite the news which was taken as something that should have been very negative for the market.  

And, now, the media, analysts and pundits are all engaging in forms of mental gymnastics to explain why the market has gone up so strongly despite such seemingly negative news in order to twist it into some uber-positive explanation for why the market is rallying so strongly.  But, I am sorry to say, this it is the epitome of intellectual dishonesty.  

Rather than come to the reasonable conclusion that it really does not matter to the market, they are forced to abide by the mechanical paradigm to which they adhere as religion, so they twist the truth to try to make sense of something they know really does not make sense to them.

So, I am going to repost this quote from the book I continually suggest for all to read:

“Observers’ job, as they see it, is simply to identify which external events caused whatever price changes occur.  When news seems to coincide sensibly with market movement, they presume a causal relationship.  When news doesn’t fit, they attempt to devise a cause-and-effect structure to make it fit.   When they cannot even devise a plausible way to twist the news into justifying market action, they chalk up the market moves to “psychology,” which means that, despite a plethora of news and numerous inventive ways to interpret it, their imaginations aren’t prodigious enough to concoct a credible causal story.   

Most of the time it is easy for observers to believe in news causality.  Financial markets fluctuate constantly, and news comes out constantly, and sometimes the two elements coincide well enough to reinforce commentators’ mental bias towards mechanical cause and effect.  When news and the market fail to coincide, they shrug and disregard the inconsistency.  Those operating under the mechanics paradigm in finance never seem to see or care that these glaring anomalies exist.” – Bob Prechter. The Socionomic Theory of Finance

In the meantime, the market has now moved past the resistance box I have recently outlined.   The reason this was my resistance box is that (b) waves do not often exceed the point wherein the c-wave is more than 1.382 times the size of the a-wave.  Yet, that is what we seem to be experiencing here.

As I also noted on the 5-minute chart, should we exceed that box, it does open the door to the potential that the blue b-wave has completed. That was the alternative count on the chart.   However, and this is very important, if a larger degree blue c-wave rally has indeed begun, then we will need to complete 5 waves up off the recent low for wave 1 of that c-wave.  And, thus far, we only have 3 waves up.  So, until I actually see alt iv-v completed, I am still going to view this rally as a (b) wave.

I also noted the following in an alert I posted not too long ago in the trading room:

“I am viewing the region from here up to the prior high as our MAJOR resistance in this region.   And, I would expect a return to AT LEAST the 1.00-1.236 extensions below in even a standard wave iv in even the bullish scenario.  

But, if we see an impulsive decline from here, then it makes it much more likely we are going to target the 6174SPX region.”

Moreover, what would count as wave i in that blue alternative count really still counts best as a 3-wave rally, which is another reason I am leaving the primary wave count right now as a (b) wave.  But, if the next decline is CLEARLY corrective, that will increase the probability of the blue count even more so.

As I outlined in the weekend analysis, while we certainly do not know what the market is going to do, we do have strong parameters to follow to identify its next larger degree probable move, as I have outlined above.  So, I am simply going to follow those parameters and align my work with what the market tells us in the coming days.