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Key Levels
Upside -- 1237, 1274
Downsie -- 1227-1230, 1221, 1204, 1180, 1136
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SPX Daily;
We threatened today to make this breakout of the 100dma be a fake out. We are sitting just over the 100 and the old channel.
Still extremely overbought on the Stochs and approaching extremely overbought on the MACD. (Long term, on a 5 year chart, MACD never exceeds 23 with these settings and we are at 16)
Key will be whether we dip back down into this channel and below the 100 again here this week. I think we will, but we'll see.
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From an Elliot Wave prespective, there's 2 options here.
1) Most have moved on that we finished the first major wave down (5 waves down off 1372) and are now in a counter-trend rally, an ABC correction of that move down. IF that is the case, then you would conclude that we have likely finished A, possibly finished B and this is a quick pullback before charging ahead yet again to finish C up of the correction.. OR we just finished A and today was the start of B down of the A up, B down, C up correction. In which case, the coming C up after B down would likely get to the 200dma and probably exceed it for a short time before finishing.
2) the scenario not many are considering.. That the 1077 bottom was only the bottom of Wave 3 down of 1 down and we just finished Wave 4 up and are now embarking on Wave 5 down and are just now starting the last wave down to complete the first major 5 wave down pattern.
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I like option 2 for several reasons...
1) it fixes the timing problem. That means we are going to collapse again right now and probably take out 1077 and then bottom for the first major 5 wave structure and THEN start the counter-trend rally that we all believe we are in now. That would allow for the usual christmas rally.
2) It would burn a lot of people on both sides.. bull and bear.. Bears wouldnt see a move coming right now to the low 1000's or high 900's that started today. And they definitely wouldn't see yet another rally to the 200 occuring after that. Bulls would once again watch everything melt before their eyes and it would be difficult to believe the market could stage yet another rally.
3) It would actually just be a cleaner count if it went down that way.
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We shall see.. option 2 would move quite a few people backwards who have moved forward way past that spot.. but the market has appeared to move so quickly that it just may make sense.
GL
CJ
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