I have been targeting a move into the 1700SPX for a while, to the dismay of the bears, the bulls finally stuck a nail in the coffin of the bears, no matter how many times the bears keep getting run over they just seem to enjoy picking tops and loosing $$, it seems the bears just don't learn their lesson. I wonder if these perma-bears that keep picking tops have any $$$ left.
There is time to be bullish and time to be bearish; Elliott Wave helps us in that regard, if Elliott Wave is used correctly. Fortunately for us, we use it well enough that it is a tool for us, not a hindrance.
Having met our target at 1700SPX, it's now that I am starting to get the bear suit out of closet, with the sentiment reaching extreme levels; I think it's now time to start to looking for a possible top, a top that might surprise many bulls.
SPX (short term)
From the June 24th lows, we have been tracking a 5 wave advance and the pop on Friday possibly ended that move, although if there is a bit more upside, I don't think it's much, so I think the markets are offering us a great setup for a reversal and one that I think at least takes us back to see 1500-1530SPX.
Ideally a small dip is seen on Monday then a new high, although there is a way that it could have ended wave 5 of [5], Holding above 1692SPX keeps the market looking higher and could target 1720SPX.
But it's now that I am advising members to start looking at buying puts and think about selling short this market. We have waited a while for things to come together much to the disgust of the bears we have remained long this market, waiting for those pieces of the jigsaw puzzle to come together.
When most of the crowd is all looking the same way, I find the best set ups are the ones that anticipate a reversal by going against the crowd, now is potentially one of the times.
SPX (long term)
My preferred count from the March 2009 lows potentially could be close to ending now, with the RSI divergence, it's the 1st time since April 2011 we have seen such a divergence, and we all know what happened after that.
The alternative idea I am working still suggests a potential pullback towards 1500-1530SPX, so both ideas suggest caution for the bulls.
With a strong RSI divergence I suggest caution for anyone that is long this market, and suggest locking in $$$.
Looking at the NYSE McClellan Osc, we can clearly see that its showing a large divergence as the market has pushed higher, so a warning sign for those that are looking "under the hood".
NYSE
When looking at the NYSE, it still needs a minor new high, and a yearly new high to complete a potential long term idea.
Another market that appears to be showing a RSI divergence with price.
One of the reasons I suspect that the move from March 2009 is a large B wave, is due to the look of some markets such as the NYSE and FTSE, whilst the SPX and DOW have supported a stronger move, we have yet to see new all time highs on the FTSE and NYSE, which is a major non confirmation with the SPX and DOW.
If you look carefully it's a similar appearance to the SPX and the same 5 wave look from June 24th lows, that's the more important part and structure than as traders we are interested in the most, as once we can confirm a peak in place, I am expecting a strong move lower.
Sentiment is ripe and ready for a large move lower, when I was looking for a low near 1560SPX it was rare to find anyone as bullish as we were, yet we were looking for a move back to 1700SPX.
All I was reading was the next great crash had started, now that the bears have been stopped and run over, its now that I am getting bearish and looking to sell this market, right about the time when most bears have turned bullish or have given up selling the market.
The conditions today remind me of the peak back in April 2011, back then you could not find a bear in sight, similar to today.
There are a few other clues I have found that also support that case of a large move lower, such as the patterns on the DAX, DOW and the VIX being back to historical levels.
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If you are long this market I urge you to tread carefully as if the next move happens the way I expect, then the next target is back to 1500SPX.
Until next time,
Have a profitable week ahead.
