Friday, February 7, 2014

Near, Intermediate, and Long-Term Outlooks for SPX

Wednesday's update contained more caveats than a prescription drug commercial, but the wave counts suggested a final thrust lower in wave (5), followed by a snap-back rally.  The snap-back rally is underway now, and my current suspicion is that this rally will end rather abruptly and unexpectedly.  Before we discuss that in more detail, let's center ourselves with a look at the big picture S&P 500 (SPX) daily chart.

In the last update, I shared a chart which noted the fractal similarity of the current Dow Jones Industrials with the 1929 market; however, the odds presently still favor the idea that we're not quite to the end of the road for the entire bull market yet.  The alternate idea of a massive corrective rally which started in March 2009 and completed at 1850 still has to be considered an underdog to the idea of new highs after the current correction completes. 

At intermediate degree, presently this structure is suggestive of a two-legged decline.  This will ultimately form an ABC (wave C down is still to come) -- if it instead turns into an impulsive form (five waves instead of three), then we'll give more weight to the idea that 1850 was a long-term top.  That's the long-term outlook and alternate. 

At intermediate degree, there is an alternate count that wave (4) completed at 1737, but I'm viewing that as a heavy underdog, at 30% odds.  Nevertheless, on the hourly I'll detail the wave count which allows that option.

The hourly SPX chart outlines my preferred target, along with the first alternate option.  Again, the idea that the entire correction completed at 1737 is presently being viewed as a heavy underdog, but I'd be remiss not to mention the possibility.  Please note the majority of the text annotation is at the bottom of this chart, including the price targets.

Finally, an update to the SPY chart, which followed Wednesday's preferred path quite well:

In conclusion, I've discussed a lot of alternates in this update, so to avoid confusion, the preferred counts across all time frames is as follows:

1.  Near-term, higher prices appear probable.
2.  Intermediate-term, lows beneath 1737 are still likely.
3.  Long-term, it presently appears that the bull market has some life left in it.

While I project the market across several time frames in most updates, I have to admit I always feel a bit humbled trying to anticipate the market's every move on all scales from micro to macro -- so don't be shocked if some of these projections need real-time adjustments somewhere down the road.  

Enjoy the weekend -- and until then, trade safe.

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Reprinted by permission; Copyright 2014 Minyanville Media, Inc.

1 comment:

  1. Great analysis as always, Jason. Enjoy your weekend.