Triangulating before Valentine's Day doesn't feel right but might play a role in stock market's pattern

Recently I've been commenting and especially tweeting about an idea of a triangle in equities, particular the S&P 500 which is what I track most closely. I've borrowed Tony Caldaro's OEW chart of the SPX hourly (thank you Tony!) from his public charts, which you can locate in his charts link at his Elliott Wave Lives On site in the sites list at right. On top of Tony's markings, I added some lines in bright blue (and a few notes) to indicate what I've been referring to. Bottom line, the SPX could turn here, or could even rise to perhaps 1096 (or 1100 to 1104), and still be within a triangle that can break to the downside.

Elliott Wavers will appreciate that I can see the triangle idea playing out either as a larger triangle, with its first leg (the A wave) where Tony has marked the wave "ii" at 1104.73, and then the B down at 1044.50, C up to Tuesday's high, D down at today's low, and E to complete anytime soon and could reach higher such as the 109o+ area.

Or as a smaller triangle where the first leg (the "a" wave) is at Tuesday's high, b down at yesterday's low, c up at yesterday's high, d at today's low and e completed. Only thing, the e wave cannot be higher than the a wave, and that may be a problem for viewing this as a smaller triangle.

That also means an even smaller triangle could be involved. Meaning, the rise from SPX 1044 to about 1070 as wave a of 2 up, then a triangle wave b that finished at today's low. And the wave c of 2 up in progress, which can project to 1086 if wave c=a. This would be convenient because it would allow that 1082 level we originally projected as the higher wave 2 target. That still leaves the door open to a wave 3 down, whether it's a wave 3 of iii or more like a wave 3 of a larger C down.

There can be more bullish ways to see the entire structure, and that's definitely a reason to short-term trade bullishly if the SPX gets above 1104/1105. Frankly, I'm not really tilting that way; but of course we'll see.

For the larger triangle idea, which I'm warming up to, it would mean viewing the drop to 1071.59 as an (A) wave that took about 2 weeks. Then this (B) wave triangle taking about 2 weeks. Then a (C) wave down that should have some symmetry or Fibonacci relationship to the (A) wave, and also take two weeks. Let's say that the (B) wave may complete either tomorrow or Tuesday (since Monday is a U.S. markets holiday). That would point the stock market to a low right into the end of February or very early March.

I know there are some reliable cycle ideas for thinking the low should be about March 10, approximately. So my idea here doesn't fit that timing exactly. Unless you extend the (A) wave timing somehow by saying it started mid-January (in some creative manner), thus letting the (C) wave take longer too (and maybe the (B) wave a bit longer).

Just some suggestions for the near-term Elliott Wave possibilities. We should also remember that the market's action remains consistent with Tony's idea that this is a wave 2 as he marks on his chart. In which case, the wave pattern looks like it is an abc=A up into Tuesday's high, then B down into yesterday's low, and C up in the making to complete soon. It just cannot exceed 1004 of course, and probably wouldn't get higher than 1082 area (or perhaps 1096 but that would be an unusually lengthy wave 2 under the circumstances).

By the way, I notice that Tony Caldaro is also posting alternative OEW possibilities for the longer-term equities markets counts, at his public charts, as marked onto the Nasdaq Composite (QComp) and the Nasdaq 100 (NDX) weekly and daily charts. That makes two alternative views, and it might even be that one of those alternates can co-exist with the primary count for the SPX if you go with the idea that the Nasdaq companies can be in a more bullish posture.

However this all works out in the near term, we still stick with the general idea of expecting weaker and lower levels in late February / early March, and then looking for another tradable swing long into a high early May. Okay - there's still the topic of whether we get yet another high in August - but right now it just seems too early to call that one, until we finish slogging through this price/time zone and can "read" from its pattern what clues indicate for later in the year. I'm still thinking by the time we get to the tradable low, it may well be in that price area about 1030 (unless the SPX really makes a big move to test 950).

Given the sideways movement we're seeing currently, that seems to support some kind of ABC idea better than the big "wave 3 of 3" that the EWI contingent is marketing; as well as possibly postpone Tony's thoughts of his wave C down. At the same time ... the last thing we want to do is become complacent! The price, time and technicals haven't ruled out the possibility of the markets rolling over into the third wave of Tony's C wave either!

Readers should also remember that Jim Curry's cycles update (posted recently here, scroll down the page or use the "Cyclewave ... by Jim Curry" label anytime) indicates lows during that late February to early March time; and resistance from his cycle bands which probably ranges from 1080 to perhaps 1091 by now. And Terry Laundry's T Theory update this morning mentioned resistance at the 1096 mid-channel line on his T Theory chart. (Links for these sites are in the sites list at right.) I still like the 1082 level which is the .618 retrace from 1044 back to 1104, but if this is a triangle then the .786 also is common, and that retrace level would be just slightly over 1091. (Interesting again as 1090 or 1091 is one of Tony Caldaro's pivot levels.) I like to point these things out because when different methods are pointing to the same probabilities, that tends to lend some more strength to the likelihood of those probabilities playing out.