Market Still On Track

Last week’s new high brought us closer to our projection and, as long as we do not see contradictory patterns, another high; and perhaps two more can be expected. Whether it’s one or two may depend on next week’s action.  

Friday’s minor correction found support where it should have and closed well, but the Globex dipped a couple of points right after the close. If a deeper correction is experienced and, if we go too deep, it will take longer to get back into an uptrend, and with the 20-wk cycle due to bottom in mid-August, what remains of the bullish time frame is getting shorter and shorter. On the other hand, a dip in Globex on Friday does not necessarily mean a weaker opening on Monday. If we make a new high early in the week and start to correct a few days later, we would still have enough time for one final thrust into the target area (about 2500).  I still expect the 20-wk cycle bottoming action to be the trigger for an anticipated three-month correction into October.

Analysis: (These Charts and subsequent ones courtesy of QCharts.com)

Daily chart

SPX continues to rise within the confines of the purple channel which encompasses the entire ending pattern and which now matches the rate of ascent of the blue 55-DMA. The larger blue channel from 1810 is rising at the same rate as the 233-DMA. If the index continues to increase in price until it touches the top of the purple channel, it will find itself at about 2500, which is the projection based on the P&F accumulation just above 2330.  

The first two waves of the ending pattern measure about the same distance (22 and 21 days) from beginning to end. If, by some strange coincidence, the third one concludes within the same time frame, it would complete on 7/31. Of course, one should not expect such exactitude, but it will be interesting if it turns out to be correct.

With the dashed blue mid-channel line providing almost perfect support for the bottom of each of the three waves, we should expect confirmation of the sell signal when it is penetrated, just before the low of wave 4 is breached.