Tuesday, January 2, 2018

Weekend Video Follow-Up

Market Outlook: Expecting Higher Volatility
Market Indexes: Major U.S. Equity Indexes were higher; DJ Util lower
SPX Candle: Higher High, Higher Low, Higher Close - Trend Candle
FED Posture: Quantitative Tightening (QT)

In the weekend video, I noted how the S&P500 could easily form a larger triangle or even a diagonal wave higher if prices did not start down "quickly" from the Friday drop. As noted in previous posts, the first trading day of the month often brings the new money into the market from company pension plans, bonus payments, dividend reinvestment plans, and 401k's, etc. That occurred once again today.

The market as measured by the S&P500 Index closed Friday at 2,674. The futures were much higher over-night in preparation for the "new" money. They, the futures, even "gapped" higher which is a fairly rare occurrence, and the cash market opened at 2,683 - up +9 points. After trading up ten more points to 2,693 there was after the first hour a three-wave four-point reversal to 2,689, followed by more sideways to higher prices resulting in a new all time high for the S&P500 and a close at 2,696.

With the marginal new higher close, the count of the S&P500 Daily chart, and it's potentially larger diagonal, would look like this.

S&P500 Cash Index - Daily - Potentially Larger Diagonal

Given the overlapping wave sequences, the triangle locations which were called in real time, and the noted divergence, it is very difficult to count this wave sequence any differently at this time. Further, the DJIA did not make a new all-time-high today, nor did the ES futures by the settlement.

We must still be patient and flexible, and follow the technical indications, until price itself signals something different.

Have a good start to your evening, and to the New Year!


  1. A count presented in Dec 27 post, where, today's move would be Vth leg of rally originating of second triangle. Curious why this previously considered count was not a viable option. Thanks.