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SPX Update: That About Sums It Up…

Well, yesterday cleared up the counts quite nicely.  The bullish trade trigger at 1374 elected and from there, the market pretty much traded straight up with zero drawdown.  That trigger targets 1408. 

We now have solid confirmation that wave (iv) did indeed complete at 1340.  Preliminary targets for (v) are 1432-1465. 

The dollar also rallied yesterday, proving once again that markets aren’t always correlated.

Straight to the charts.  Since everything has clarified, I can project some likely target zones for each wave.  First the 5-minute chart, and the probable target for blue wave 3.

Next the 30-minute chart, for context and the larger wave (v) targets.  If you’ll note the RSI momentum has exceeded any so far produced by this rally.  Those looking to short would be advised to take a step back and wait — moves almost never reverse significantly without first building a momentum divergence.  A divergence exists when prices make new highs, but momentum fails to exceed its old high.  Currently, no divergence exists, which makes higher prices extremely likely.

Next, a couple of Bollinger band charts; one of the SPX, and one of the VIX.  SPX closed outside its upper Bollinger band, which doesn’t happen too often; and VIX closed outside its lower.  These signals often indicate that an intermediate top is getting closer.  Once again, I do not expect an immediate top here by any stretch — I expect higher prices first.

In conclusion, the move appears pretty straightforward, and while not exactly “anticipated,” since the signals were a bit conflicted, it’s not at all unexpected either.  Once the bullish trade trigger elected, the market declared its intentions and was off to the races without looking back. 

I expect higher prices over the near term, though there should be some 4th wave sideways/down corrections along the way.  The market’s next significant turn is unlikely to come until at least the mid-1400’s.  After wave 3 completes, targets will become more accurate.  My SWAG right now is 1440.  Trade safe.

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