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Saturday, August 15, 2015

Saturday, 8/15/15 update

Looking at the longer term charts of the ES/SPX two things are pretty obvious: 1) the powerful upside momentum off the 2011 lows evaporated at the turn of the year, 2) that turn has not resulted in a serious bear trend, at least not as of yet.  Result: trading range - and an extended and very frustrating one.  Yes, there have been one or two weeks of sell off during the year, but they fizzle out after a bit and the BTFD'ers jump in with a stick save.  So as of this point this whole period appears to be a correction in the context of the bull off those 2011 lows with a little more of that bull (or should I say bullsh--) yet to come. 

The EW pattern in the ES since the mid-May high @ 2134 is difficult to pin down.  The SPX (cash) isn't much better.  The ES put in a 3 wave pattern from the May top @ 2134 into the early July low @ 2034, followed by a quick 3 wave move into a top of 2126 on July 20th.  So those waves are an "A" and "B" wave of either a flat or a triangle that is being formed.  There is a 3rd possibility, and that is that those waves are part of a multiple zig-zag formation, but that option seems less likely given the pattern since the July 20th high.  That pattern since the July 20th high is particularly convoluted.  The low of last Wednesday could mark a "C" wave low in a triangle:

OR it could be the wave 3 low of an ending diagonal "C" wave:

On the hourly chart the pattern since that July 20th top can be counted as follows (in the context of a developing triangle from the May highs):

It is possible that the series since the July 20th high is a sequence of nested waves 1 & 2, but that interpretation is beginning to strain credulity.  If that is in fact the case, then this market should break south hard and fast very soon.
Of course, and as always, the market will be the final arbiter - it has the right to do whatever it wants and I have the right to be wrong.

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