Yellow Has Gained In Probability

Today, the SPX moved through the pivot.  And, as I outlined in the past, when we move through a pivot, it makes the prior continuation move much less likely.  Therefore, the yellow count pointing us to 4800SPX region has gained in probability.

So, what will make it my primary count?  Well, if the market pulls back correctively from whatever high we strike in this rally, and we then rally back over that high, that would make it likely that we are going to rally to the 4800SPX region.  

You see, there is still one more shot for the bears to take this down, and that is with a potential leading diagonal.  In that scenario, this rally is wave iv in the diagonal, with a drop below 4300SPX providing us with a 5^th wave for that wave [1].  Clearly, I am not a fan of leading diagonals, so there is no way I am going to rely on that potential at this time.  It is for this reason that I am more likely going to pivot to the yellow count, but I just want a bit more evidence, as outlined above.

Now, one of the other issues I am having on this rally is that it is not really impulsive looking in the SPX.  However, I can make out a leading diagonal off the recent low in ES.  But, again, I just don’t rely upon them, so that is why I want to see a corrective pullback, followed by a rally back over whatever high we strike.

So, in summary, I am much more open now to move into the yellow count pointing us to the 4800SPX.  And, should we get the signal I outlined above, that is going to be my primary count.   Moreover, I have added a target on the 60-minute chart for that wave v of [3].

I want to also note that I do not have a lot of confidence in this structure in the SPX, especially if we are dealing with a leading diagonal.  So, if the market is going to prove the yellow count in the coming week, then I am going to be riding that rally with individual stocks that have much clearer structures.

Lastly, as I noted in the live video today, even though the market may now attempt the rally to 4800SPX, I am still going to keep the bigger b-wave on my chart.  But, now it will be at that next higher target.  In order for me to be more certain that this will lead us to 5000+ in the coming year, we will be going through this exercise again from the next high in the 4800SPX region.  Yes, I am being cautious because I simply do not trust the SPX, especially when I focus upon risk management. 

But, for now, the bears have lost control of the market, and can only regain it with a drop below 4300SPX to complete a potential leading diagonal for wave [1].  And, I am not going to count on them completing a leading diagonal until they actually prove it.   I am getting prepared to move into the yellow count based upon the next pullback and what the market does thereafter, as outlined above.