Looking For At Least One More Rally

With the market breaking below 2455SPX this morning, it suggests that wave (iii) is likely done, and we may have even completed wave (iv) today.

As long as today’s low holds, I have a target for the next rally in the 2475SPX region.  That is where waves (i) and (v) would be just about equal, and where the 2.618 extension of waves (i) and (ii) reside.  So, for now, that is my next target for this current rally.

However, this now brings me to the point where I need to apply some brakes to the long side.  You see, we seem to be coming to the end of the current rally based upon seeing an almost full wave count, along with the developing further negative divergences supporting that wave count.  Moreover, we are now a stones-throw away from the long-term target we set for wave (3) off the February 2016 lows, so I have to begin to turn a bit more cautious.

While my preference still is to see another iv-v play out in the coming weeks, and take us into our target box overhead, we have enough waves in place with one more rally to suggest that investors/traders become a bit protective of what they own, as well as the profits they have garnered in this long-term rally.  Specifically, as I have noted before, I see us potentially topping soon in wave (3), with wave (4) taking us back to at least the 2360 region, with an ideal target between 2300-2330, and a potential overshoot down to 2285SPX.

So, for now, I am still looking higher towards the 2470-2475SPX region.  And once we complete the next 5 wave micro structure, I will still be looking for another iv-v to play out as outlined on my charts.  But, I just wanted to at least warn everyone that this last iv-v may be the “one-more-high” that may not show up.

5minSPX
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1SPXdaily
1SPXdaily
Avi Gilburt is founder of ElliottWaveTrader.net.