SPX: Follow Up of the Short Term EWP
TECHNICALS ARE GETTING EXTENDED
I maintain the two potential counts for the advance from the November lows:
1. Option 1: Triple Zig Zag. If this is the case we need an 11 legged structure therefore there is a pending wave (B) pullback followed by the last wave (Z) up.
2. Option 2: Double Zig Zag: If this is the case we are in the last wave (Y), but due to its corrective look it should unfold an Ending Diagonal.
Therefore regardless which count is correct the next pullback will be bought.
The short term pattern (Up leg from the April 18 low) is not clear and there is no indication that it is over, but we have warnings that a multi-day pullback is due:
- Extreme bullish sentiment in the option camp (Equity Put/Call ratio very low).
- Daily Stochastic is overbought
- Negative divergences of breadth indicators are becoming visible
Regarding the EW count of the current up leg (From the April 18 low) without much confidence on a specific labelling I am looking at two options:
- Red count: Zig Zag ===> Price is in the final wave (5) of (C)
- Blue count: Double Zig Zag ===> Price is extending the wave (A) of the second Zig Zag