Measurement - Note

The chart below is of the SP500 (cash), SPX, 2-Hr time frame. We note that in the current count under consideration, the SPX cannot make a new all-time high with only the sub-waves, below. Meanwhile the DJIA has already made the new all-time-high.

S&P500 Cash Index - 2 Hr - Likely Count

This count would max out at 4,770.99 but the prior all-time-high was 4,818.62 so it remains a bit of the way off. The primary reason for bringing this up is the following.

If the S&P500 is to make an ending contracting diagonal, then it would likely have to have a retrace and then another leg up, counted as (W)-(X)-(Y) to the third wave of the diagonal. As noted previously this double zigzag would still be acceptable in a diagonal, but it does run slightly afoul of a guideline. But if there is no retrace & further extension or higher all-time-high, a diagonal third wave could not be considered for this index. And that would leave only a "B" wave count of some type for the indexes. Meanwhile, the Dow has made the new all-time-high already and can be considered already for either the diagonal count or the "B" wave style count.

It is way too early to say which will occur. But seasonality and a year-end rally, along with new money from the "first of the month - of January - effect" after a dip could provide the needed new all-time-high in the SP500. 

Yet while these are "likely" based on history, they do not have to happen. On some measures, sentiment is quite extreme in the short run. If - for some reason - they don't, then either the diagonal will not occur, or the count above would have to be modified.

Right now, things are on track. Let's see how they go.

TraderJoe