Before I even begin this post, I want to make this VERY clear that this is what I am left with now as an ALTERNATIVE count, most specifically if the market continues higher this week. Since I always need an alternative count in the event my primary count is wrong, this is all the market is leaving me with at this time, so I am compelled to present it to you well before it increases in probability. Again, this is simply to present an alternative in the market, and it is not my primary count. Yet, I will now explain what will make this increase in probability in the coming months.
As you know, my expectation has been that wave 5 will attain a minimum target of 3200, with the potential for a blow-off type of top in the 4000/4100SPX region. Based upon the fund flows we have seen over the last few months, I am leaning much more strongly now to the 4000/4100 potential target. So, that means, I am still expecting a sizeable rally in the coming 3-4 years. Even from where we stand today, it is an almost 50% rally potential.
Now, my ideal target for wave 4 was in the 2100-2200 region, and I have explained in nauseating detail in many prior updates how I came about that target from multiple perspectives. That still remains my ideal target for the same reasons.
In order for me to view wave 4 as having completed, as presented as an alternative in yellow now, I have to view that structure as completing a much rarer corrective structure in a W-X-Y structure. Moreover, not only do I have to accept a rarer structure, I have to accept a rarer structure that did not attain its target. For these reasons, this must remain as an alternative UNTIL THE MARKET PROVES OTHERWISE.
So, how can the market prove otherwise?
Well, first, the market is going to have to top around the 2820/30SPX region and then break down. You see, if we top at the 2820/30 region, that is where we would have proportions in the market we normally see in an impulsive move off the lows even though the structure is not suggestive of the fact that this was an impulsive structure. Most specifically, we would be able to “claim” the consolidation I now consider a [b] wave is a 4th wave, with this being a 5th wave rally topping at the 2820/30 region which would then be .618 the size of the initial rally off the lows. Specifically, the standard size for a 5th wave within an impulsive structure tends towards .382-.618 the size of waves 1-3.
So, again, the FIRST sign would be a top in the market in the 2820/30SPX region (which is initially confirmed by a break down below 2770SPX). Second, we MUST see a corrective decline take shape in the coming months down into the 2500-2600SPX region. These are the two things I MUST see in order to even consider this potential.
But, since this is really the only alternative I will have left if the market continues to rally this week, then I am compelled to now present this to you and at least prepare you well before this potential MAY become a reality.
Again, I want to stress this is NOT my primary expectation, but I have to at least outline where it can become a much stronger potential, at least from an objective perspective.