Symmetry Bespokes Final Thrust Up

Bespoke notes how the recent drop is symmetrical with the prior summer drop - 42 days top to bottom. This suggests a bottom with a final leg up still. Tony Caldaro further notes that the recent drop "retraced 61.8% of the previous uptrend [which] fits within the parameters for the typical wave 2 corrections during this bull market."

On the other hand, Zerohedge points out that today's action betrays the signature of a serious short squeeze. When we broke below the lower trendline of the big rising wedge, short interest increased; and often when the market comes back up to kiss the trendline goodbye, it denotes a short squeeze. 

Usually the stub week of Thanksgiving is positive, and the following Cybermonday is down, so look to several days action next week to get a read on this market. We came up near the tops in 2000 and 2007, close enough to argue for a triple top, but typically the triple top would be closer (ie. around SP1550-1600). It wouldn't surprise me to see a final thrust up. Given the false break below the trendline, this thrust would likely have a false break above - another short squeeze of players betting on the upper trendline - before the end. So SP1565 is still on the radar.

The primary elliott wave counterview is that this rally is a counter-trend rally in a larger move down, and using the math of Caldaro the other way round, should go back 62% before reversing down. So far the Friday thrust got us 38% back, which is usually the minmum retrace; and now we might see a down move (wave B of the countertrend rally) followed by a final move up towards SP1430 (Dow15K). At that point one of the two scenarios will meet their end; this Shroedinger Cat bounce will either be found dead or alive.  

Comments

[Virgil]

Yelnick,

Very nice - a physics lesson along with the market report. Appropriate, moreover, considering the conflicting signals. I would go along with Caldaro and his corrective count if we were only looking at the SPX, but the Dow has clearly made impulse waves down. It seemed to lead and non-confirm the summer swoon, so I'm not discounting its leadership just yet.

And then there's the issue of a third of third kickoff to an epoch of upwardliness arising with declining volume, hair trigger artificial/nonhuman breadth, and lackluster fundamentals. I suppose that's been the unavailing argument for the past couple years though, and up is up.

One thing is certain and that is you are correct about cyber Monday. Everday this week was green and 5 waves were put in since Tuesday. Time for a pause

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