Wednesday, February 17, 2021

SPX Update: To B-wave or Not to B-wave

Last update noted that I would like to see the current wave head at least a bit higher, and it did that... but it's left us something of a conundrum near the high:

I think I'm very slightly leaning toward the idea of a b-wave high, which is represented by the gray option (above -- aka: an "expanded flat") at the moment, but it's another tight call -- the way we'll parse the two options is that, assuming SPX heads down below 3885, we'll then watch to see if it ends with a 5-wave impulsive C-wave and runs up to a new high from there.  If it forms five waves down, then bounces and stays below 3950, then declines BELOW that nadir, we would give more weight to the idea that the prior wave was a triangle fourth wave.

Intermediate-term, SPX came very close to tagging the red line target.  In the event the gray expanded flat path plays out, that would likely take it up to red after the current decline completes:

In conclusion, there are now enough waves for a complete five-wave rally (and hence for a turn), but it's quite possible that the high is the b-wave of an expanded flat.  If that's the case, then new highs are still to come.  If that's not the case, we should be able to sort those options in real-time heading forward.  Trade safe.

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