First let me get two things out of the way. 1) I crossed the 100k view plateau. I want to thank you all. The success to date is beyond my wildest dreams. 2) I apologize for excessive time off and the issues I have had with Stockcharts not working with vista. Thanks for the many emails offering assistance. 3) No rants lately cause two great vacations have me tempered, but they are coming. Complacency is not a good thing. I even found myself getting sucked into the green shoot vortex briefly this weekend. Don't believe the hype.
Rising Wedges Everywhere!
Lots of charts here, but the common themes are the indicators on a DAILY basis are very overbought and all have formed massive rising wedges which historically if read right are bearish signs. All of the indexes made it to this point in different ways, but the formations all wound up being the same. It was only natural for anyone to have anticipated this formation for the correction. It took a while to truly show its self, but they are here now.
BUT - These are not "THE" wedges we are looking for to create P3 (I think as proposed in the State Of The Charts posts). The top trendline is in place IMO, but the lower trendline will reset. On this next pullback. I do have a scenario with the lower trendline set and the old B-D line from the triangle that formed Oct - Feb could be the real top trendline, but it is just too far above for me to make that call. Market would really have to pop up here. Where the indicators are now and the ABC corrective I am following, don;t allow for that pop here.
If the wedges are an A-E formation, they are all coming up for the E touch now. In this most recent rally decreasing acceleration is being experienced. The dailys as mentioned are overbought and, as I anticipated, the weeklys are setting negative divergences. I did not get the anticipated pullback to 847 before the recent run up, but I'll take 868. Not that bad a miss in the big picture and a pretty darn good call for further strength that all my permabear buddies could not believe.
Now, how will my target of 1050 work? First let me let you know I am now leaning again on my original 1121 target (GS will of course over shoot their own estimate IMO LOL). How do we get there? We reset the lower trendline on this pullback when we get the gap at 910 filled and then complete a final 5 wave move to the top for C. We may be completing wave 1 here, setting up this pullback for 2 and wave three completes the backtest of this lower trendline. Wave 5 will either be a massive pop off euphoric top or truncate. The ABC corrective targets are more defined now and they are right in line with the total retracement fibs of the big fall at 1121 to 1228. They almost measure perfectly. See my chart in State Of The Charts Post for a visual.