Nice Try, But Did Not Get There
By
Avi Gilburt
As we saw this morning, the market gapped up right to the top of the micro pivot, yet has since backed off. It was clearly unable to break through the pivot, so we did not get that break out and buy signal. So, where does that leave us?
Well, I have adjusted the counts now to place the more immediate bullish count as the primary, but do not let that necessarily fool you to believe this is a high probability right now. Rather, I am more in the 50/50 camp as to which path it will take.
The more aggressively bullish count suggests that today’s high was the completion of a leading diagonal for wave i of [3] of 3, right at the maximum level at which I would accept that count. That would now make this pullback a wave ii. If this path plays out in the coming days, then a break back out over the high today will make it clear we are likely in wave iii of [3].
Of course, the alternative count suggests that today’s high was a [b] wave in an expanded 2nd wave structure, which is presented in blue.
Now, before you are going to mortgage the house to go long the market, I am going to again present the charts which present risk to the market. As you know, the IWM still does present a certain amount of risk in the downside pattern which has yet to be invalidated.
Moreover, I took at look at the NQ today, and the rally came just shy of the point wherein [c]=.764*[a]. So, we have to be on the lookout for a 5 wave decline to begin at any point in time now. That could signal that we have completed a corrective rally in the NQ, and the next major leg lower has potentially begun. It would take a move through the [a]=[c] point, which also happens to be the all-time high, for us to consider a much higher move in the NQ.
So, for now, the SPX is still presenting us with a potentially bullish pattern developing. Yet, the IWM and NQ are presenting us with potentially bearish patterns. Therefore, if you intend on going long on the SPX, please recognize that there is still risk inherent within this market, especially when considering where we are within the very long-term trend, as we are likely approaching what could be a multi-year, if not a multi-decade top.
