BULLS HAVE LOST AN OPPORTUNITY
The intermediate trend remains bullish (The Advance off the November low is not over yet), but the corrective EWP from the May 22 most likely will be more complex, therefore I still expect another new all time high.
This scenario remains my preferred one as long as price does not breach the 50 dma which today stands at 1610.
Bulls have squandered the opportunity to kick off the last wave up due to the failure to achieve an impulsive up leg off last Thursday's lod.
Even though now the equity market looks vulnerable, the unquestionable corrective pattern unfolded so far is not suggesting that price is involved in a major reversal.
Therefore if the 50 dma holds in my opinion the initial downward EWP (Double Zig Zag) could morph into a Flat or a Triangle.
If this idea is correct then from last Thursday's lod price has to unfold a Zig Zag up. If this is the case and the 0.618 retracement holds the equality extension target for the assumed wave (C) up is at 1668.
With the price info that we have at yesterday's eod I rule out a bearish move below Thursday's lod.
In addition the extremely high reading of the Equity put/call ratio is aligned with the Zig Zag idea.
In the daily chart we can see that obstacles are piling up with the bearish cross of the 10 dma below the 20, yesterday's gap down and Thursday's failure to reclaim the 20 dma, however as long as Friday's gap is not closed the Zig Zag idea is technically feasible.
In the currency front since now the correlation between USD and Equity is positive (Strong USD = weak JPY ===> Favours equity bulls), the short-term scenario explained above needs a pullback of the EUR.
Maybe an ED could complete the wave (A) of the complex Double Zig Zag underway since the April 4 low, if this is the case a wave (B) pullback could test the 200 dma at 1.3055.
