More Direct Path - Market Analysis for Aug 13th, 2024

Despite my initial expectation to the contrary, the market has moved through resistance and seems to be posturing to take us to our higher targets for this rally in a more direct fashion.  Just to explain my view, I had assumed the overlapping structure into yesterday’s high was an ending diagonal, but it seems to have been a leading diagonal for wave i of 3.  And, it is not often that one sees a leading diagonal as a wave i of 3.

Today, the market moved through both the ES and SPX resistances.  That now forces me to view us as being in wave iii of 3 in the [c] wave rally earlier than I had initially expected.

To this end, I have added the micro wave count on the 5-minute SPX chart.   And, what it presents is that as long as we hold over the pivot on the next pullback, then I am looking up to the 5530-5580SPX region.  The reason I had to lower the bottom part of our target region is that the 1.764 extension of waves 1-2 as shown is the 5531 region, and this would be my minimum expectation now for this [c] wave rally.

I want everyone to look at the daily MACD in the SPX chart attached, and you will see that it has only begun to turn higher.  So, my expectation is that we should see a sizeable bounce in this index before the market may top out.

Furthermore, as long as SPX holds support, then I am going to assume we will see a catch-up move in the IWM, as the 1-2 structure in the IWM is pointing us up to the 219-221 region, which would be the similar move to the SPX 5530-5580 target.

Now, I know I have posted this warning many, many times during the rally off the 2022 low.  But, I feel I need to say it again.  PLEASE do not begin shorting this market aggressively until we see the next 5-wave decline.  Keep in mind that should we complete this [c] wave over the coming week or two, and then only see a corrective pullback rather than a 5-wave structure, it would likely mean the market has intentions on one more higher high which is labeled as the alt-v in blue on the 60-minute chart.  

So, in summary, as long as the pivot between 5379-5398 holds on the next pullback, which would be wave iv of 3 in the [c] wave structure, we will continue to look higher over the coming week or two as we attempt to complete the 5-wave structure for wave 5 of [c].  Should we break below that pivot, then we can go back to considering the larger [a][b] as presented as the alternative now that we are through resistance.