Wednesday, November 5, 2014

SPX, NYMO: NYMO Reaching Extremes

On Friday, I noted that 2020-26 SPX was a potential target for the present wave -- and on Monday, SPX hit 2024 and reversed to 2001.  It's not entirely cut-and-dried whether the decline was an ABC correction or not -- but one thing that is very clear is that the rally up from 2001 was impulsive, and that presents us with some near-term target zones.

The five-minute chart published on Monday proved helpful, by correctly identifying, and calling attention to, the red trend channel -- SPX has since traveled from the top to the exact bottom of that channel.  I've noted the current near-term targets on this chart:

I'd like to again call attention to the McClellan Oscillator (NYMO).  Last time I called attention to this indicator was a week ago, but at that time, I didn't feel the rally was ready to roll over and noted that I felt NYMO (at that moment) was helping to confirm that the rally was probably wrapping up its fourth and fifth waves.  As I also wrote in that update:

My conclusion, trade-wise at this moment, is that with a typical rally, I might think it was nearing completion -- this rally has already clearly shown it's not a "typical" rally; therefore, we would be foolish to ignore that and attempt to treat it as we would a typical wave.   

So, will this rally be the exception that breaks the rule here, too?  Nothing is foolproof, but in my experience, extremes in NYMO are among the most reliable signals out there, as demonstrated by this (nearly) six-year historical chart -- and NYMO is finally reaching an extreme:

So, while I still feel that wave counts are speculative at the moment, here's my best-guess as to where we are in the current wave -- which includes the lingering potential that all of (1) (or 5) completed at 2024.

I'm also going to republish a chart from roughly a year and nine months ago (February 8, 2013) because, well, how often do you get to say "no material change" on a chart this old?  My long-term target of 2170 +/- is essentially unchanged, although another formula I employed (back then) arrived at 2100 +/-.  (500 points ago, though, 2100 vs. 2170 seemed pretty irrelevant.)  Hopefully we'll be able to narrow those targets down in real-time, assuming the market approaches those zones.

Intermediate-term, I'm undecided at present as to exactly how we get there.  As of yet, the rally has given no significant signs of abating -- but it has reached an inflection zone, and inflection zones always bring the potential of a reversal.  For the moment, anyway, that's about all that can be known.  Trade safe.

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