S&P500: ending diagonal forming?!

6 nov 2019

The price action on the SPX since the May 1 high has been rather frustrating and overlapping. For one, the index is only up 3.9% since then. IMHO this means the SPX is working on a larger ending diagonal Primary V wave. Ending diagonals move in 3s (3-3-3-3-3) most of the time and this means (red) intermediate wave-c of black major wave-3 is now underway. This wave-c then subdivides further into three (green) minor waves, which in turn subdivide into once again three smaller (grey) minute waves. Price should now and ideally be in minute wave-b of minor-c of intermediate-c of major-3 of Primary V. This means once minute-b has completed we should see a rally for minute-c to about 3175 to complete major-3. Then all that's left is major-4 and 5 which should draw well into 2020 and I suspect will complete by the time the US presidential elections come about... The alternate options is that we're dealing with a standard subdividing impulse (labeled with "alt"), but IMHO this count hinges on one data point: red intermediate wave-ii MUST be the August 23 low. If it's not then the advance of any of the other lows made in August to the mid-September high was only three waves with a final c-wave made up of 9 smaller waves. Yes the quadruple bottom in August leaves a lot to be desired. IF this impulse is however operable, then we haven't even had a (orange) micro-4 wave since the SPX 2893 low made on October 10 as that was a 67p drop while the largest pullback since then hasn't been more than 33p... So IF there will be an orange micro-4 and 5 then price will have to bottom around SPX 3040-3010 and then move to about 3125-3140 to complete minute-i. IF that happens we can then focus on the standard impulse wave. IF price drops and closes below SPX 3010 I'll be looking for minute-b of minor-c of the ending diagonal pattern to complete at around SPX 2975 +/- 25p.

One of the reasons why I think we'll see once again higher prices even after a 100p possible correction is because market breadth as measured by the A/D lines, Bullish Percent Indexes and other indicators has been strong enough during the October rally to allow for higher prices once the current rather overbought readings and complacency in sentiment (low VIX, high CNN fear/greed [89% yesterday], low put/call ratios) have been taken care off.

Trade Safe!