tuesday update

SHORT TERM: positive
For the very first time since this intermediate term trend began, the general market defied the weakness in the NDX and continued higher, pulling the NDX up with it. This is a very strong impulse wave. This particular advance, which began on Nov 15th has been relentless. So much so, that it is forcing us to change our short term count from that of an extending fifth wave, to an unfolding third wave. The recent one day breath and trin figures in the NAZ  also confirm this count. I’ve posted two charts NAZ/SPX daily. They display the intermediate term wave progression from the beginning: NAZ Oct 13th, SPX Oct 21st.
Counting this current advance as an extended fifth of a third wave can no longer apply, simply because in the SPX our wave iii/3 was shorter than wave i/3, and now the fifth wave has exceeded the third in length. This is not acceptable. This is a normal adjustment required as the waves unfold. We basically start with the minimum labeling and adjust accordingly as the intermediate term wave unfolds. It changes nothing for the intermediate/long term bullish outlook. However, it will get us in alignment with the correct count, so that when this entire intermediate advance ends it will be recognized as a fifth of a fifth.
It would appear, from this vantage point, that our minimum targets for the SPX and NAZ  may be met before this wave 3 of iii concludes. I quote from Nov 12th:
"Since this is a third wave (iii), and third waves are usually the strongest. I am anticipating that this advance will exceed the previous one, wave i, in strength and percentage of increase. This is accomplished by what is termed an extension. An extension occurs, when a five wave structure continues to subdivide without any appreciable correction. We witnessed one major extension between Mar 2003 and Jan 2004 in the NAZ. Typically, wave 3 starts to subdivide into lesser and lesser degrees of waves, thus extending the entire uptrend. I’m not looking for anything similar here, just a normal extension. Thus, I’ve set some upside targets for this uptrend, using fibonacci relationships, for the two major indices: NAZ 2355 – 2560, SPX 1280 – 1345. The first number represents a relationship of wave iii = wave i, the second is wave iii = 1.618 x wave i. These are just general guidelines to assist in watching the uptrend unfold."
If this is the case, then we have a very good  chance of reaching the secondary target during wave 5 of iii. This could be a very strong advance and a great time to be bullish, especially after two years of a virtually sideways market with an upward bias.

About tony caldaro

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