Market Pushing Resistance

As the market continued to squeeze higher today, it certainly looks like we are completing a 5th wave in wave 1 of (iii) as an ending diagonal.  While there is certainly a little more room overhead, with the 2193SPX level the ideal target, if we see a strong break below 2182SPX, it can open the door to the completion of this ED.

Remember, when an ED completes, the move in the opposite direction is often quite violent.  So, my expectation is that IF we do turn down, the move will begin quite strongly and likely drop towards the 2151SPX region.  The target for the reversal out of an ED is often where it began, and in our case, that is the 2151SPX region.  And, that will likely only be the a-wave of wave 2.

So, my primary perspective is that we are completing wave 1 of (iii), and will likely see a wave 2 pullback into the Thanksgiving holiday.  This “should” set up our Santa Rally for wave 3 of (iii) in early December.  But, should we simply continue to melt-up through resistance, then the darker green count is in effect, and wave 2 has already completed.

1turnchart
1turnchart
Avi Gilburt is founder of ElliottWaveTrader.net.