What to look for next week. If SPY gaps up or moves higher we are in wave 4 minute corrective and C of 4 large EW (can see if you scroll out, or hit the make it mine and scale out the time frame). If you think this theory is correct don't take stabs at wave 4's-wave 5 minute corrections. I would suggest for you to wait for a wave 5 minute to finalize. A wave 5 minute/corrective C of 4 larger EW, most likely ends at or slightly out of the channel I highlighted in dashed purple lines (scroll out to 1 day chart or look at chart below).
If we gap down or move down we are still in wave 3 minute corrective and C of 4 large. If true the support for a minute wave 4 bounce would be at 161 and a wave 5 corrective C of larger 4 ending at 159.
**A break below the red box and a VIX move higher than 24 would imply this theory is incorrect. The EW cycle impulse trend is over and we are in a all out EW cycle correction. This correction ends the bull run since the 2011 US congressional deficit standoff.
Post Wave 4 Hypothesis
Unsurprisingly, US congressional deficit showdown will happen again this year before the federal budget October 1st deadline. We were supposed to hear a deficit resolution on March 27th, but President Obama, Senate and Congress decided to once again kick the can down the road.
If my EW readings are correct we should see a 5 wave peak sometime in mid July, early August. It is slightly possible we see a 5th wave extension, but given the impulse structure since October 2011, we should not see an extension. I would also look for precious metals and other to rise quickly before October 1st federal budget deadline.
Other than SPY my favorite near term picks are AAPL and FB . Later into next month SLV and DBA .