Climbing the Steps – The Fall Grind

Non-stop in both September & November, market indexes churned higher and higher despite a number of negative headlines, sentiment extremes, exhaustion signals, divergences, and a number of other indications that made many think it would come crashing down at any minute. I’ve been anticipating a pull back in action for a couple of weeks, continuing to ride upside trades while participating in downside hedge trades on indexes. The grind continues…

Since the October 3 low at 2855, the S&P has seen a strong recovery and push to new all time highs. Once the compression was broken to the upside, it’s been a steady grind higher. Seeing a 10% gain in 38 sessions, price has continued to keep pushing.

A lot traders and investors saw the large megaphone look that was forming. Turns out, it a compression that formed into a symmetrical triangle wedge that eventually broke to the upside to kick off the grind move.

The wedge was a bit of a give-away for those who are familiar with Elliott Wave. For those who are not, I’ve drawn a few examples on teh chart as well. The coil up and price compression that sees an upside break paints one of two pictures to me.

The first being the Elliott Wave triangle, which can only be found within specific wave corrections (Wave 4, wave B or a complicated wave X), the most logical here being wave B based on structure. With a wave B Elliott Wave triangle, this would give us an approximate first target above 3231.

The alternate outcome is essentially a (1)-(2)-1-2 compression, now breaking out into wave 3 of (3). This alternate count would give a target even higher than the Elliott Wave triangle outcome. As it sits, both primary and alternate counts point to upside targets.

We’ve been following both counts with members of our premium service for some time, targeting the first ideal extension. If you have any interest in expanding your knowledge on Elliott Wave counts and structures, check out a few free videos from the video course that is offered to members.

S&P Elliott Wave triangle breakout

Essentially, 3231 is the next notable extension. As long as the invalidation level of 2855.90 holds, upside is expected to continue. We won’t move in a straight line, and pull backs along the way are to be expected. Once we see that 3231 level, how price acts will be very important. A notable reversal into negative divergences above that area would be cause for concern.

For now, the grind continues into fresh all time highs. As long as price remains above 2855.90, it makes sense for one to anticipate pull backs in action, but calling for a crash at all time highs seems like farfetched wishful thinking for those who are primarily short a relentless grinding market.

Climbing the Steps – The Fall Grind

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