Monday, November 6, 2017

SPX and Oil Updates

Last update noted that the preferred bull count was hinging upon the (then) all-time high appearing to have been a b-wave, but that I was favoring the bulls by a 60/40 margin.  That turned out to be correct, as SPX just barely made a new all-time high on Friday.  This continues to leave the edge (note: not the guitarist from U2) with the bulls, so bears are reduced to mere near-term hopes yet again, as shown on the chart below:

And while "alt: ii" is a genuine possibility (the near-term bear hope), I'm not inclined to favor that at the moment (hence the "alt" designation).  I'm more inclined to think the correction has burned enough time (and enough traders) that it's ready to break and run toward red iii.  However, given how much of a pain this market has been, I'm not implying that I'm dismissing "alt: ii" entirely (I wouldn't have placed it on the chart if I were), I'm just less inclined to think we go that route.

For what it's worth, I suspect SPX will decline at the open, toward 84, and potentially as low as 80-81, before rallying back up.  If we sustain a breakdown at 77, then alt: ii will be on the table.

Moving on from equities, I need to update the oil chart for readers, because oil has broken its previous high, and that alters the picture somewhat.  In the last update, I had "alt: bull b" at the 42.05 low, and that is now a more distinct possibility.  It appears that the wave that was previously labeled as blue abc with a c-wave diagonal may instead have been ALL OF A, which was a leading diagonal instead of an ending diagonal (it's almost impossible to differentiate the two in real time, because they often have the same micro structure). 

However, all is not yet lost for bears from a mid-term perspective, because there are a couple other options for wave B -- so I've outlined two important upside levels on the chart.  Bears should take blue C seriously if the market sustains a breakout over those levels.

In conclusion, SPX has confirmed my call that the 2588.40 high was a b-wave, which likely puts us in a small third wave rally.  The bear option simply forestalls that rally by stretching red ii sideways a bit farther.  Trade safe.

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