If there were any doubt remaining on the preferred count, the market answered those doubts on Friday with a blistering rally. Things will get a little more difficult now, as the preferred count is for this rally to be C of 2/B -- and while a second wave needs to stall shy of the all-time-high in SPX, at B-wave does not have any such limitations. Given that the alternate count is for ALL OF an ABC to have completed at 2728, this means that, as I wrote last Wednesday:
Thus, given that option 1 and 2 are both bullish for at least the next 90 points or so, bears might want to await an impulsive decline before acting with much aggression.
While we've now traveled roughly 90 points higher since then, the second portion of the warning -- to await an impulse decline -- still applies (and is almost always a sound strategy).
Let's look at INDU first, which has now cleared its a-wave high, which was the minimum expectation for the pattern:
Similar caveats regarding a second wave vs. a b-wave apply to SPX:
In conclusion, INDU has now rallied to its minimum expected target (SPX is just a hair shy), but we do not yet have an impulsive turn for bears to act against. That can always change in the span of a couple hours, so readers who aren't members of the forum (where I would likely call it out in real time) will have to watch the charts carefully.
The past few weeks have been pretty easy money, but things do get a little more nuanced now -- at least for the moment. Trade safe.
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