Short Term And Longer Term Charts

Futures look double-toppy thus far. This might allow another 2000 print on the S&P this morning, but there was a clean five waves down from the highs yesterday which should be respected until negated by a new high.

If a correction does develop, it may only be part of a smaller degree wave four correction to the 1980-1985 area, however. Below is the updated speculative wave count that I've been following. The bull may not be ready to give up just yet. In fact, it's not even certain iii has been put in yet.

Note also that 1941.50 is the new stop.

As long as the markets create clean waves, trading them can be a great deal of fun. In this case, it appears that the market is forming the final impulse of a channel which has been posted in various forms for months now. As simple as it looks now, it has been a challenge.

Occasionally there is chatter on Stocktwits or Twitter describing the market as "relentless." The more I hear this term, the more I think the market may be in a larger degree third wave. I mentioned this yesterday. Here is a chart showing what I mean.

Third waves, according to the Elliott Wave Principle by Frost & Prechter, are "a wonder to behold." The word relentless seems to describe a third wave, but one that may be part of a larger pattern that is not necessarily a new bull market but a B-wave bounce that is part of a much larger corrective process. This would explain the low volume and weak internals as Frost & Prechter termed B-waves as "phonies." Also, wave C would likely probe much lower than is shown on the chart.

At this point it is too much to try to fit current market structure into a grand scheme. The best course of action is to keep it simple by focusing only on the day-to-day waves. But occasionally it helps to see if the day-to-day waves still fit into a larger scenario. In my opinion, they still do.