The last rally in the first week of 2017 - 2233 to 2282 - could possibly be the last wave of wave iii -1.42% leg. There's also a subtle bear impulse wave off 2278 (red line). Daily and now weekly is showing decent divergence along with impending wedge break.
The news is also confident that Trump stepping into office is good for equities . While that is true, I think it may be prudent to look for nice corrections before jumping in for the next run up.
I'm looking at shorting at these levels when wedge firmly breaks down with tightened SL above 2282. The target is 2210-2206. Then looking to buy there for next 100+ pts rally targeting 2330-2365. At this point EW rules we shouldn't expect bears to break down the blue line yet.
Comments
kunsan
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Be aware that the rise from blue (ii) to red i was 0.618, so it might be a flat correction. In other words, blue (ii) could actually fall at red ii, which would make this ED longer in time than currently shown. The lower trendline might START at red ii.
OwenMohd
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@kunsan, that's an interesting idea. Are u suggesting a running flat and the red i is the ending C wave? Im not able to make the counts from red i to ii inner waves with a C formation, or I can't see it very clearly.
kunsan
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@OwenMohd, yes, that's what I'm suggesting, and I accept that the C wave isn't clean. It is more clear on the Dow Jones where it appears to be a falling wedge.
Although I'm aware of all the arguments for a rising wedge on SPX, it still looks like rising fives to my eye, as you've shown. However I have wave 1 at the 2120 peak (as a truncated 5th - it's clearly a small five wave advance).
I'm concerned that the rise from blue (ii) to red i appears to be a three, hence the idea of a running flat.