Back To The Top
By
Avi Gilburt
With the market rallying back towards the recent highs again, I cannot say that much has changed from my weekend analysis.
While the red wave 2 count is a little less likely now that we have exceeded the .618 retracement, I am still leaving it on the chart for now. Moreover, the [c] wave of the triangle still remains quite in play as well, and I will retain both of these counts as long as the market remains below the high struck on 12/26 of 6049.75.
Should the market take out that high of 6049.75, then I will only have the yellow [b] wave count left on the chart for a near term bearish resolution. But, should we reach that point, I will then add in an alternative count for a higher high, with this being an a-wave of a final a-b-c rally, in an extension of wave v or alt wave iii. (I am simply just giving you a heads up before it happens as to what to expect as an alternative count – but that alternative count will not become primary unless the pullback from that high is corrective).
For now, the market can still see a bit more of a push higher in this current run, but I think the downside seems more likely than much further upside at this point in time. A break down below 5945SPX will signal that we are either in the [d] wave of the triangle, or an a-wave of the red wave 3.
I wanted to conclude with a point of misunderstanding that some of you may hold. While you have clearly heard caution in my voice and in my writing, there is a very good reason for that caution. When I look at the very long-term market structure, as presented by the attached 100+ year SPX chart, you will see that we are viewing the market as completing a final 5th wave rally in a multi-decade 3rd wave which began at the 1932SPX market bottom. It is for this reason that you will hear caution in my voice and in my analysis.
Yet, we still have not seen confirmation that a major market top has been struck. However, due to the bigger picture, I feel that I would be remiss in my duty as a market analyst in not warning you early on regarding the potential pitfalls of being too bullish as we complete what seems to be a very long-term market structure.
With that being said, I will also remind you that when an ending diagonal completes, we oftentimes see a very specific reaction, in that we see a very strong reversal right after the top is struck. While this does not happen 100% of the time, it is what we experience the great majority of the time. Therefore, since we have not seen this type of reaction, I am starting to give more weight to the alternative count in blue. And, should the market provide us with a clear 5-wave c-wave decline that will hold the support box on our chart, I will personally choose to take some of the cash I have raised and place it back into the market. Again, this is due to the lack of a clear signal that the market top has been struck.
So, I hope this clears up my perspective as to why you hear caution in my analysis, yet why I still intend on adding long positions under the right circumstances.
