I hate “lazy” charting, and I think it’s important to constantly challenge one’s assumptions. During yesterday’s session, I began considering the possibility that my initial labeling of the smallish correction back on March 12 as a 4th wave might actually have been correct, and that we were witnessing an extended fifth wave. The rally does have a “blow off top” feel to it, which is characteristic of an extended fifth wave.
To try and sort things out, I’ve charted a few other markets, and as of this moment, the extended fifth scenario for SPX looks quite plausible. That could certainly change with a little more price movement, but I think it’s worth considering the possibility, especially since the NYA and RUT seem to support this scenario.
Have a look at all the charts and see what you think.
Extended fith wave or not, the first thing that definitely bears mention is the fact that if the count below is correct, then wave 3 (or 5 if it’s an extended fifth) should not exceed 1408.16, due to the length of red wave 3 (see below).
Minimal annotations on the big picture chart below — I’ve left the target box for the more conventional count, though I’ve turned it yellow to reflect caution. 😉
Here are some charts where the more bullish count seems to run into trouble. First, the NYA:
Next, the RUT:
And finally, the BXK:
And now the warnings and the take-away. Really, at a larger scale, everything (except for the Trannies) looks very bullish as of this moment. If it’s a whipsaw head-fake, that’s how it should look… but of course, sometimes a duck looks like a duck because that’s actually what it is.
If the bears can’t turn these breakouts into whipsaws in the near future, then they may have to go into hibernation for awhile. Given all the charts we just looked at, though, it seems the bears may have a black swan event up their sleeves. It is important to realize, however, that until some key levels are broken on the downside, there is no confirmation of anything bearish. This could be an extended fifth wave, and still only prove to be wave i of 5. Without confirmation, there are only probabilities and speculation.
Given the appearance of the structure in all the charts as of right now, there is a decent probability that we are witnessing an extended fifth wave unfold in SPX; aka – a blow-off top. After taking a look across markets, I’m leaning toward that outcome, and it will be interesting to see what the market does over the next few sessions to confirm or deny that theory. If this is an extended fifth of wave (v), then this next turn will be a big one. Trade safe.