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SPX, RUT, and CVX Updates: Additional Telling Signs in RUT?

Well, I’ve got good news and bad news.  The bad news is that the short term structure is an absolute mess.  The good news is: I think I’ve found the key to figuring it all out over the next few days.

“How?” I can hear you ask incredulously, as you scratch your head in wonder, possibly hard enough that your fingernails remove several layers of your scalp. 

Well, once again, RUT seems to be throwing off some key signals.  Yesterday, RUT overlapped the assumed wave (1), which means that the current wave up in RUT already topped.  Plus RUT is now sporting a pattern that, if it generates another wave up, would look an awful lot like a leading diagonal.  I think the chart below may be our Holy Grail for the next few sessions. 

As goes RUT, so goes the world?

The next chart is the 5-minute SPX chart, which would still look a little better with a new high.  It’s also possible wave c of (y) topped.  It’s nearly impossible to say, given the short term charts, which look like a child’s drawing of a bamboo forest on a really windy day.

It’s also time to update CVX.  The original battery of CVX charts can be found in this article from March 18 (Why I Haven’t Yet Joined the Long-Term Bull Camp).  CVX also would look better with another wave up, since the decline yesterday appears corrective.  The only thing that bothers me a bit about CVX’s chart is the current expected shallowness of the retrace rally.  It would not surprise me to see CVX do something unexpected to deepen the retrace a bit.

Next is the 60-minute CVX chart.  I’ve noted the possible target a bit differently on this chart.  We’ll just need to see what happens over the next session or two.  For now, based on the smallest waves, 104.50 +/- seems like a pretty good target area.

And finally, since there isn’t a ton to add to the short-term SPX outlook, here’s a big picture count that I’ve been playing with and tweaking for a while now.  I wanted to share this because I’ve never seen a count exactly like this floated in public, and I find the possibilities intriguing.

The alternate count for this chart would also move the wave iv bottom to the recent lows.  This would still maintain the ending diagonal form.

In conclusion, there appears to be a little more upside due for SPX — but that’s just a best-guess.  Of note, if RUT makes a new high, I will probably shift everything onto a more bullish intermediate footing (though not necessarily a short-term bullish footing) — but I will of course need to see how it looks across markets before doing so. 

The upside for traders is that if RUT invalidates the preferred count, and is forming a leading diagonal, there’s usually a deep retrace in the first big correction to allow bears to exit and bulls to buy the dip.  However, unless and until that new high happens, the more bearish intermediate count remains preferred.  If the more bearish count is correct, a big decline should unfold soon.  Trade safe.

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