(b)e Prepared For A (b)low-off This Coming Week (SPX)

(b)e Prepared For A (b)low-off This Coming Week (SPX)

Whenever there is atypical price action it can be indicative of a (b) wave in process. I can conjure up quite a large quantity of choice words that start with (b) and that I would place on this current move up from the last low. (b)ut let's just get into what could be the likely next move instead, eh? First the slightly zoomed out structure here in the 2 hour view:

My expectations remain for a pullback to start soon. The structure of that pullback will be highly instructive for the Spring / Summer timeframe this year. On balance, when I look at the NYSE and NDX charts, it would seem that for as long as key support levels hold we will see one more even higher blow-off move. That is not a lock yet and I have personally turned more cautious as of late. Now, please allow me to explain the "why" of the potential (b) wave to (b)egin this coming week.

The micro structure as I am able to see it is already quite full. However, there is one last main Fibonacci extension at the 5098 price level. That also has various price confluences from other swings that all cluster there. It's almost as if it were acting as a magnet. This target does not have to be scratched. We do not always hit targets. (b)ut here is one way that it could play out.

What if we are in that (b) wave now and price will back off ever so slightly to (b)egin the week and then race to new highs? If true, then we may see 4979 on Tuesday and then a +100 point move or more to stretch for that last Fib extension just overhead at 5098. This may be concurrent with some sort of catalyst interpreted as 'positive' by readers of headlines. Then, price would reverse strongly in a seemingly swift swoon leaving head-scratchers galore. 

This is just a guess based on the structure of price. Should 4979 give way and we are seeing 5 wave declines shape up, I would anticipate a retest of the 4917 level and then we'll see...But, don't be surprised if there is just one more (b)low-off move midweek. It may even happen after hours - so, keep that in mind. 

In the bigger picture, I do anticipate a pullback that could take as long as April to complete, once a top is finally found. The basic path could be down into the end of Feb, up into mid-March and then a major low in mid to late April. But, that's speculation for the moment until we can observe more structure on the chart. 

Enjoy the weekend!

Levi is an analyst at EWT primarily working with the Stock Waves team in providing analysis of U.S. stocks.