Musings on the monster: comments about surfing this rally wave

As the S&P 500 got to one number of the 881/884 area, and the Nasdaq got to one number of the 1398/1409.71 area yesterday, I just kept thinking that we're lucky not only to have had those numbers, but also the benefit of analysts such as Andre Gratian who has written in weekly updates posted here (and his daily updates to his subscribers) about his projections for levels above 875. As well as the ChartsEdge weekly forecast - readers here might want to click the label, "Chartsedge weekly" and look at that again. So far, despite some wobbles Tuesday morning that dug lower than their weekly forecast indicated, that weekly forecast has held in well to point to higher levels later in this week. As well as the ChartsEdge daily forecasts giving good guidance for intraday cycles. I haven't seen a daily map from ChartsEdge yet, but will post if/when I do.

Thought it may be a good idea to post some thoughts this morning as I see that the futures are well up this morning! I see that the futures moved to the higher of the ranges just mentioned - about 884 (although we'll have to see if the cash SPX gets there - seems likely it will). And about 1409 for NDX. Both of these represent Fibonacci levels. 884 is the .786 retrace for SPX back to the January 6 high, and 1409.71 is a 1.382 extension in the Nasdaq 100 as I explained in a post with chart, referenced yesterday and described over the weekend. For Fibonacci trading, what I'm accustomed to seeing many times is the number being tested with a slight overshoot, and then one looks to see whether or not a reversal pattern plays out. Any reversal pattern should be accompanied by volumes, and then indicators, that confirm it. An apparent reversal that gets broken to the upside would signal something different of course.

Sometimes a relatively small Elliott Wave pattern needs to play out at a Fibonacci level. When that happens, it looks like price resonates around the Fibonacci number, re-testing it more than once. I have the sense that a strong Fibonacci-based reversal doesn't do this however. My sense is that a strong Fibonacci-based reversal will test a number once, and then do its reversal job. But I'm not going to write that into stone.

All said - I outlined very recently (yesterday I think!) the three dominant Elliott Wave patterns of which I am aware. I was writing an email to a trading buddy this morning stating that one of them, Tony Caldaro's B wave up, could theoretically morph into an expanded flat that sees the B wave actually vault the Dow Jones Industrial Average to new highs. This is partly based on my knowledge of EW flats, which Tony once mentioned he thought this correction should become. Not all flats are expanded ... and Tony only projects to about 1100's in SPX. But as an "Elliotteer" I am aware that some flats do become expanded with the B wave climbing to new highs. So it must be considered. Especially since I saw Terry Laundry's chart on Tuesday, though I still haven't absorbed Terry's analytics and don't really know what levels Terry may project. And also, since I was reading up on Martin Armstrong's thoughts that some people seem to be posting about the Internet. I won't try to summarize but some of those ideas would support new highs (but, Armstrong seems to predicate that idea on the market first digging to new lows, such as Dow Jones Industrial Average to 4000).

So having referred to the eyebrow-raising idea of new all-time highs, there are also ideas of new lows, in some of the Elliott Wave analysts. I'm not prepared to run through an exhaustive "bulls versus bears" analysis of which ideas are more likely to prevail right now. I just want to mention that the levels indicated for today should be watched, perhaps more than any numbers we've watched since the March 6-9 lows.

I know that Andre Gratian, Tony Caldaro, and no doubt others, are looking at other numbers and projections that are significant in their systems. I did some additional reading of a couple of other cycles analysts that I review periodically - I think what I read last night, reinforces my sense of what's going on. And as I mentioned, overshoot can and usually does happen with the Fibonacci-based patterns I'm familiar with. But my personal strong sense is this: the timing and levels we are seeing indicated for today, around 884 SPX and 1409.71 NDX, need to be watched carefully.