Blue Is Gaining In Probability
By
Avi Gilburt
With today’s action, the market has provided us with a bit more information with which we can make decisions about positioning. And, the higher high we struck this morning does open the door to a leading diagonal for wave i of [3] of 3 in the blue count.
Again, this has not been my preferred wave count due to the shallowness of what would be counted as wave 2. It did not even reach a .236 retracement. However, if the market is going to continue to break out in a more direct fashion through the pivot, then I will have no choice but to adopt this more accelerated and immediately bullish wave count, and view us as already in wave 3, with wave [3] of 3 targeting at least the 5900SPX region.
I want to again post what I said about buying a potential break out if that is what the market is intending in the coming days:
“I would like to make a quick point about the more immediate bullish potential on the SPX. IF, again, that is a big IF, the market chooses the more direct break out path, then the pivot represents about 17 points. If we break out through the pivot in a more direct manner, then you can choose to buy long positions once we break out through it and set your stops just below the pivot. That would give you approximately 20 points of risk for what could be a 400 point rally. Again, just an idea IF we do see a more immediate break out.”
As of now, I cannot say that the more accelerated count has a low probability, as I would likely view it as a reasonable probability after today’s action. However, I am still going to retain the primary as shown, with a larger wave 2 pullback potential until we actually see the break-out, which would likely occur in the coming days if it happens.
I simply have a hard time relying on a wave 2 that does not even retrace .236 of the prior wave 1. While it does happen, it is not terribly common. And, following our standards keeps us out of trouble the great majority of the time. Yet, there is a minority of the times that this type of set up will break out directly. We should know within the next few days.
