Is Wave iv" Complete?

The cash s&p500 daily chart generated a technical “sell” signal at the close Friday when the RSI failed to confirm Thursday’s close (which was higher than the 9/19 close). With the swing index also turning down it is safe to say that the Elliott Wave that began from Tuesday’s low at 1507.13 is complete. If an impulse wave began at the 9/10 low then the wave ending at yesterday's high is either “b of 4” or a “failed 5”. If it is a fifth wave then it is a failure since the high of 9/19 has not been exceeded.

Of importance in my work is time. The swing down from the all-time high to the 8/16 low was 23 trading days. The swing up from that low to the 9/19 high was 23 trading days. Symmetry. This symmetry also complicates the Elliott count since it keeps alive the other scenario I’ve been following which is an a-b-c zigzag up from 8/16 to 9/19 where the “b” wave was a triangle and the “c” wave the post-Fed thrust into the 9/19 high.

With the daily chart looking bearish to my eyes it is time to update the weekly chart. The latest price bar on this chart is classified as “inside”. The last technical signal on this chart was a “sell” at the all-time high. However, there was a positive reversal signal generated in the RSI on August 10. This preceded the strong rally since and actually points to a calculated target of 1548.54. This value meshes with the Fibonacci target zone on the daily chart and supports the “b of 4” wave count. More recently the price action has not been following the weekly momentum indicators in their strong upwards movement. Both the confirming and Derivative Oscillators are above their all-time high readings of this July while price is not. This is a potentially bearish development if price were to turn down from here.

Overall then, I think the weekly chart shows we are at or very near a price high. I think it best supports the “b of 4” wave count. My timing work would then support wave 4 to end next week and wave 5 around October 10. The question at that juncture will be whether the entire rally from August 16 is over or not.

My next posting(s) will cover the new monthly and quarterly charts.

Running out of gas?

Why am I counting this rally on the cash s&p500 index as a corrective (bear rally) a-b-c zigzag pattern rather than a 1-2-3 of an impulse (new bull market rally)? Am I biased?

Perhaps. But I do try to make Elliott counts that "fit" my technical analysis work. One aspect of which is momentum. As the market pushes up here all I can see is failing momentum. This developing bearish divergence is coming at a point in the RSI where momentum would be expected to fail in a bear market rally (around the 65 area). In today's chart the top indicator is the RSI. But note below that is the confirming indicator and then the Derivative oscillator, and both are lagging badly here. If price were to march higher and higher over the coming days this pending divergence between price and momentum could be nullified. But I dont expect that to happen. But of course I could be wrong!

The price chart shows Gann lines and Fibonacci retracement levels. 1542-1545 is the last resistance level before the all-time high.

And I will admit to being wrong if we get a new high. But for now I continue to be out of equities and on the sidelines.

A Glimpse at the DJIA

Recent posts have shown two competing a-b-c wave counts on the cash S&P500 index from the mid-August low. Both zigzag counts show the rally about to end without making a new all-time high. I still don't know which is correct but the Dow Jones Industrial Average (DJIA) is voting for one.

Today's chart is of the venerable Dow which also shows a nice a-b-c rally pattern from August. It is also showing a technical "sell" signal as of yesterday's close. While price closed higher last Friday the RSI (top indicator) failed to confirm. The Derivative Oscillator has now rolled over as well (bottom indicator).

In my view the retest of the July highs is failing.