Monday, October 2, 2017

SPX, RUT, INDU: SPX Closes in on 9/13 Target Zone

It's recently occurred to me that it's been a REALLY long time since I discussed the basics of Elliott Wave Theory, and/or technical analysis in general -- so anyone who's started reading in the past few months may be totally lost.  Accordingly, here's something I haven't posted in as long as I can remember:  If you're new to Elliott Wave Theory, you might want to check out my brief primers (HERE).

SPX has continued heading toward the 9/13 target zone of 2534-42.  So far this has happened without any real surprises, since blue 4 bottomed where expected and then remained relatively straightforward.

RUT has continued to move in a parabolic fashion, and is trying to break clean away from its old megaphone pattern.  Sometimes markets will back-test the upper trend line of the megaphone after a breakout, but it's not guaranteed with a move like this one.  If we see an impulsive reversal, we'll attempt to determine if that's headed toward a back-test.

After INDU's brief "false start" lower in August, where we watched for bearish overlap that never came, it resumed its rally, and has now reached the lower edge of the "perfect world" target zone mentioned on 7/14.  Although, the perfect "perfect world" target is 22,699, so I'll be curious to see how close that comes.

Here again, there's nothing in the charts yet indicating a reversal, so bears may want to continue to show patience, despite the alluring (to bears) proximity of the "v" label.

In conclusion, while it appears that we're inside a fifth wave rally, that wave appears it still has farther to run.  It is also always possible for a fifth wave to extend, so bears will want to exercise patience for the moment, and await the first impulsive turn.  If you've been a long-time reader, you know that we don't miss many when it comes to impulsive turns -- in other words, typically we spot the first one and accurately anticipate the next one before it arrives, so there's really no need to jump the gun.  It's better to miss the exact top than to go broke front-running a turn.  Trade safe.

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