We Got Our Push Higher

With the expectation for a follow through higher today now met, and even carrying us further than I would have expected in one day, we are now at a point where the market is going to make a decision again.

While this still is potentially a wave 4 rally as presented in red, it is taking us quite deep even for an ending diagonal.  Yet, I can still maintain the count since this is only 3 waves up off the recent low this far.

However, due to the size of this rally, it clearly has opened the door to the yellow count, as we have moved through the 1.00 extension and the a=c target for wave 4.  We are actually now approaching the 1.618 extension, which is quite large for an a:c relationship.

The upcoming test will now be whether the market holds the pivot below on the next pullback.  If we break down below the pivot, then we have our signal that wave 5 in red to the downside is in progress.  If we do not break the pivot, and begin an impulsive rally off the 5947ES support (the 1.00 extension which is the common target/support for a 4^th wave), then we will likely be rallying back to the 5985-6020PX region to complete the yellow b-wave.

Now, if we do rally higher in the coming days as per the yellow count, it would clearly take the red count off the table.  However, it would mean that I would need to add an alternative count, which I discussed in the live video this morning to our full membership.  

So, just to prepare you in the event that does happen, the “new” alternative count would have me view the recent low as wave 4 of c of v of [c] of [5], as per the green count, and that we are starting wave 5 of v of [c] of [5], pointing to the 6150-6273SPX region.  That will also represent our new target for alt wave iii in blue.   But, it will NOT be placed on the chart until we complete 5 waves up in the yellow count.

But, the distinguishing factor between that new alternative and the yellow count (assuming we do complete 5 waves up) will be the manner in which we decline from that high in the 5985-6020SPX region.  If the decline is clearly impulsive, then we remain in the yellow count and look for a test of the support box below us on the 60-minute chart.  If the pullback is corrective, then we will have to move to the “new” alternative count.  Again, the “new” alternative count is not on the chart yet, as I am speaking two to three steps ahead and the red count has not yet invalidated.

So, please recognize that the last three paragraphs regarding the “new” alternative count are ONLY applicable if the market is able to complete 5 waves up over the coming days.  If we break down below the pivot over the next day or two instead, we remain solidly in the red count, and expect a test of that support box below us sooner rather than later.