Can We Drag On?

With the market continuing its meandering today, I still have to point to the potential that this FOMO 4th wave may not have been concluded.

In fact, if you look at the IWM chart, it really would look best with us still being within the b-wave of this correction, with the c-wave still taking us into next week before it completes.  And, as long as the SPX remains below the 2805/10 region, it keeps pressure down for this to continue into next week.

So, at this point in time, I think I really have to be about 50/50 as to whether this 4th wave has yet completed.  Yet, as long as the market remains over the 2750SPX region, I have no indications that we will not fill out that 5th wave higher.  Moreover, it would take a break down below 2730SPX to suggest that a top is in place, and that we are heading down into the 2500-2600 region sooner rather than later.

“But, I do want to reprint the bigger perspective post I made earlier today, as one has to understand the risks we now face:

For those trying to squeeze those final dollars out of this rally, please take a step back.  We have gone straight up since the lows, and the MACD has struck levels which have only been struck at the highs of Jan of 2018 and March of 2000.  Moreover, the MACD has now just rolled over and went negative.  

Now, if we are able to complete the FOMO count to the 2875SPX region, we will likely see negative divergence on the MACD, and would provide even starker warnings about how much the risks have risen up here.  

Also, should we break 2730SPX directly, rather than be able to push to a higher high, then I think we will likely revisit the 2500-2600 region next”.

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Avi Gilburt is founder of ElliottWaveTrader.net.