Weekend Update: Time to…………

Perhaps put some trailing stops on your equity ETF positions. I’ll explain my rationale down below. For now, equities continue on long/buy Signals. SPY/SPX, SMH/semiconductors look to have traced out five waves up from the recent low and traced a reversal candle on Friday, so we could see a bit of a retracement for these and perhaps other equity ETFs in the coming days.

The wave count options are shown below. Unless we see an extension to minute wave [v], I’m expecting an immediate term pullback under each of these scenarios. The bulls are focusing on the green options in which this bull market should continue for months, likely into the 2020 election. The green count is that either minute wave [i] of minor wave 3 of intermediate wave (3) of primary wave [5] or all of minor wave 3 have concluded. While the immediate term impact may be indiscernible, the target for the bull market top will obviously be impacted by which prevails. The bears have viewed this impressive 2019 run in equities as a bear market bounce. They see the large bearish rising wedge as a sign of impending doom should it break to the downside. The bearish alternative that I believe is a low probability option. This option is that primary wave [4] is still underway and the (B) leg has just concluded. From here, we could see an impulsive (C) leg down to below 1900 SPX to complete [4]. Considering the number of indexes that have already made new all time highs, I find this count highly improbable. While the rising wedge may look ominous, wedges often turn into channels with impulsive third way burst upward as expected by the green count. Additionally, the wedge only measures 96 points, which would merely be a re-test of the broken inverse head and shoulders neckline if it reached its fullest extent.

About alphahorn

I received an MBA from Columbia University’s Graduate School of Business in New York and am a Wall Street veteran. I’ve worked for a number of investment banks including Smith Barney and First Boston/C S First Boston in New York. Over the years, I have developed my own Proprietary Swing System and I combine that System with my own Elliott Wave Analysis to trade.
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