The SPX sees your "two" but seems to be raising a healthy "one" as we look at prospects for another new rally high

Some Elliott Wave types think the equities markets already topped last week, as I mentioned over the weekend here, and therefore should be counting today's rise as all or part of a "wave two" corrective pullback upward. That might be "two for you," but "one for me" as the markets raise the stakes with the probability that today was all or part of a "wave one of 5" movement pointing to new rally highs. So far it looks to me like either a small "a-b-c" or a small "wave i, ii, iii" but I won't go into great Elliott Wave counting detail. Suffice it to say, if the SPX is tracing out an ending diagonal triangle (EDT) then this can be the first wave up with a second wave down very soon, then a nice third wave up. It was on this basis that I tweeted today about the potential for a small intraday head-and-shoulders pointing toward 1058 or possibly lower support at 1053. The small stick save at end of day (presaged by ChartsEdge's "pattern recognition map" at their subscriber site) may be saying that we'll see more movement up for this first wave, and possibly negating an ending diagonal wave structure - but again, I know that's more detail than most really want or need. Bottom line - support levels have moved higher again, with 1061 again and 1063, and important support at 1058 and especially 1053. At this point, it would even be surprising to see a break of 1039 (but never say never). If you prefer to cling onto a more bearish point of view, help yourself - given what the Elliott Wave count really looks like (this is why it's a good idea not to pay someone else to count it for you because they can and do make mistakes, you know who I'm talking about) - and given the cycles and projections indications from other methods like Andre Gratian's technical analysis, the ChartsEdge cycles, and frankly the Fibonacci levels in the QQQQQ's which now points to $43.30+ - the odds favor the markets testing higher.

Does this mean I'm bullish? Hey, if you've been reading here any length of time you know better than that. Just looking for the rally to put in another new high. We may well see that later this week, and then will have to do the analysis to see whether that'll do it or will it need yet a bit more.

As for intraday traders, many seem able to use the ChartsEdge intraday maps and I find them startlingly helpful. Those who cannot seem to get the hang of them or work with them, fine, use something else. When you look at the ChartsEdge map for today (posted just below, early this morning) which they created as the projection for how the day would look after the open - and then compare to the intraday SPX chart (upper right), it sure looks a lot more predictive than any set of squiggles I've seen anyone else put down for likely movements during the day. As I mentioned, the ChartsEdge pattern recognition version even added that stick save at end of day, but it's part of the subscriber site so I didn't want to post that up this morning - anyone can get their own subscription. For what ChartsEdge makes available openly, it's a great resource if you have the judgment to use it as a resource within your own disciplined trading plan.

If you didn't like the way the market actually rose more steeply from the open, compared to the map - just get used to the way the map is pointing to intraday cycles. The cycle obviously rising into mid-day, with weakness after that. That's very valuable information before the market open. There's more information on how to use the maps, and how to react if intraday bias starts skewing the curve intraday, at the www.chartsedge.com/wp site and also at my NB3 site (in links at right).

On the SPX hourly chart below, I've marked in the basic idea of counting out the zigzag bear-market rally, at least the part of it we're working with now. Too soon to say whether we're looking at an EDT or standard impulsive structure for this last move up. It could even turn into a triangle that says the wave "4" marked on this chart isn't done yet, and then start the wave 5. I just wanted to put up something that illustrates the most likely wave count based on everything I'm seeing. There's a good chance that tomorrow, especially if we see a pullback, may be a great short-term buying opportunity into the end of the week.


UPDATE: Below are McClellan charts for the NYSE and Nasdaq. The Oscillator is bouncing from oversold, and the Summation Index remains relatively high though weakening. This relationship is similar, from a technical perspective, to the sentiment perspective that Andre Gratian included in his array of analyses this past weekend: bullish near-term, more concerning around the corner.