SPX: wave 3 or 5, of 5, of WAVE 1? (that's a lot of waves)
With SPX hitting extreme overbought on short-term RSI on the D, W, and nearly on M time-frames, it's hard to risk long positions. Long term RSI on the D is also extreme overbought and approaching same status on W, near on M. Yet, the market grinds higher as we know it can ignore technicals longer than expected. Mainstream media is completely bullish and FOMO seems to have set in. Put/call ratio at extreme lows (no one is buying protection :-0!). Smart money is long dollar, short gold and long volatility. So, what's going to play out?
We began shorting with small 1/4 positions at 3440 up to 3500. Expecting a rollover somewhere in this zone down to the averages (3380-3340 area) and potentially (hopefully) a start of major Wave 2, with stop losses at the 3520-3550 areas according to where the position was opened.
Until today my perspective was that we are in the final wave 5, of 5, of 1. I decided to take another look starting at wave 4 of major wave 1 that I now believe ended June 29th (not June 12th). The impulse wave after the June a,b,c correction lasted 17 days. We are now 22 days into the current impulse following the July 30th pullback (wave 2). If we agree that a wave 5, on any time-frame cannot be longer than a wave 3, then that fact alone actually places us near the top of wave 3 of 5 of 1. The chart looks more like we are due for a wave 4 of 5 correction, then a final wave 5 of 5 rally to the 3612-3674 area to complete major Wave 1.
So, we'll hold the shorts a bit longer to see if a wave 4 plays out allowing the opportunity to cover for a modest profit. Straight up to 3612 seems unlikely but still possible.
Major wave 1 count is in bright green, minor wave 5 count is in blue. 3612 target is using Rule of 7 calculation, and 3674 is the first Fib extension past the previous all time highs. Let me know if you agree. If not, what do you see?
We began shorting with small 1/4 positions at 3440 up to 3500. Expecting a rollover somewhere in this zone down to the averages (3380-3340 area) and potentially (hopefully) a start of major Wave 2, with stop losses at the 3520-3550 areas according to where the position was opened.
Until today my perspective was that we are in the final wave 5, of 5, of 1. I decided to take another look starting at wave 4 of major wave 1 that I now believe ended June 29th (not June 12th). The impulse wave after the June a,b,c correction lasted 17 days. We are now 22 days into the current impulse following the July 30th pullback (wave 2). If we agree that a wave 5, on any time-frame cannot be longer than a wave 3, then that fact alone actually places us near the top of wave 3 of 5 of 1. The chart looks more like we are due for a wave 4 of 5 correction, then a final wave 5 of 5 rally to the 3612-3674 area to complete major Wave 1.
So, we'll hold the shorts a bit longer to see if a wave 4 plays out allowing the opportunity to cover for a modest profit. Straight up to 3612 seems unlikely but still possible.
Major wave 1 count is in bright green, minor wave 5 count is in blue. 3612 target is using Rule of 7 calculation, and 3674 is the first Fib extension past the previous all time highs. Let me know if you agree. If not, what do you see?