With a yellow flag waving, the equities markets march higher as we watch these pivot levels

The equities markets, or at least some of the indices and sectors, marched higher today as the S&P 500, Nasdaq, Retail, and Goldman Sachs (GS) (interesting mix) made new highs. Other sectors such as the banking index and energy (oil) rose but not to new highs. The Elliott Wave pattern for many of these does suggest that the move up is a third wave, but it's too soon to say whether or not this will manifest as a standard impulsive wave or as part of a restrictive "ending diagonal triangle" (EDT). As Tony Caldaro says in his Thursday update after the close today: "Today's rally pushed the SPX above the previous uptrend high. After holding critical support at SPX 990 last week the market rallied through the 1018 resistance pivot and is now challenging the long term 1041 pivot. Until this pivot is broken there is potential for a developing diagonal triangle. Should it be broken to the upside the next important pivot is at SPX 1107. Both potential counts have been posted on the SPX hourly chart."

For those not familiar with the ChartsEdge daily maps, don't get caught up thinking that today's map didn't "work" because the close was higher than it pointed. It's a cycle map so we use it more for timing of cyclic highs and lows, and not necessarily for price levels or for relative highs/relative lows. Some days it nails relative price with such uncanny accuracy that we might become complacent it will do that every day - but let's not push our luck. Today, it did a great job of indicating the early rise, weakness from that, and then another rise.

Technically the picture is mixed, as the McClellan Oscillator moved up but not to new highs. Arguably this remains a very cautionary negative divergence if this is supposed to be a third-wave movement, but it can be consistent with the third wave of the last "c" wave of the Primary B, using Tony's OEW nomenclature. I've made some markings and notes onto the S&P 500 (SPX) chart, upper right. Two of the most important, the StochRSI and ADX-DMI, are both saying this is a strong move, and that's frankly indicated by the fact that volumes are increasing. How strong? well it's consistent with what I mentioned - strong enough that this can be a third wave of a final movement for Primary B. What that implies is that any day now, the 3rd wave will roll over into a 4th wave pullback, and then we should expect a 5th wave movement back to yet one more new high that should finish the rally.

This is also consistent with what I described with my prior post that included trendlines on many index daily charts in that "candleglance" graphic. In the SPX chart, upper right, I added such trendlines again. If the idea of an EDT plays out, then the SPX should not go higher than the upper trendline (actually it should fall a little short of it) before rolling over into a 4th wave pullback. That type of EDT movement would also point the SPX to a lower target than the 1100 area, for example Tony's idea about his 1041 pivot that would have 1048 as the upper limit for the EDT to complete Primary B.

I wonder if an EDT could also point up to 1053 or 1060, and I think there may be a symmetry target that would get the SPX to 1053 where there's also one of my Fibonacci retracement levels. But I can accept Tony's suggestion that an EDT should remain within the confines of the current pivot, meaning no higher than 1048. And, it's a bit early right now anyway to try deciding! We should also take Tony's general point about his pivots - in general, no matter what the wave structure, if the SPX gets over 1048 (meaning 1049 or higher), then expect it to probe significantly higher (message: don't be short over 1048!).

If the movement upward is a standard impulse then this third wave alone can take it to 1049 and beyond. If the dollar and VIX loss of support and drop is for real and with lasting effect, perhaps that's what we'll see. For now, on a swing trade basis, it still looks like the yellow flag of caution is still waving, even though the equities markets have purchased (via the falling dollar) an extension of time and price.