Monday, March 29, 2021

SPX and TRAN: The Fed is Running Out of Paint

Last update noted that SPX had multiple options and no "defining waves to add clarity."  Today, we have a bit more clarity, and I've charted the two leading options on the chart below:

Bigger picture, even if the market takes the near-term bear option above, that won't immediately eliminate the intermediate bull options showing up later -- we'll need to see a larger impulsive decline to help put the bull options on a shorter leash, as discussed below:

Basically, big picture, we have two potential counts:

  • We're wrapping up five waves at multiple degrees, for a massive top
  • We've only wrapped up three waves at the current degree, with the potential of an extended fifth still on the table -- to be followed by a massive top (but extended fifths can run an outrageous distance before topping)

On the fundamental front, we all know the Fed and the Federal Government are painting themselves into an awful corner via debt and money printing -- the question is whether they've run out of paint just yet.  We know they will, and likely sooner than later... it's just a question of whether that day can be pushed off a bit further or not.  Trade safe.

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