Lots to be excited about this week as the best ending-diagonal tape in a long time continues to form, ominous like the storms off the west coast of the Africa. Something very serious is brewing.
Here's the proposed E-D count. With Irma looking like it will not level Miami, we can expect a gap up on the /ES of at least 10 handles tomorrow night. That will be a nice start to an extended 5th wave that targets 2509 on the S&P 500:
SPX 9-8 ending-diagonal
If this plays out I'll be pricing week 1 October SPY puts, for retrace of an even larger ending-diagonal and initial low on October 6th. This begins a larger move that initiates the Bear at long last and finds desperation support in mid-January 2018.
SPX 9-8 doom
Hurricanes aside, the real shit-storms hit in 2018. And the bounces are going to be as much fun as the panic sell-offs.
From the 2417 low on the S&P, it looks like we are three waves into an ending-diagonal that could make a new high this week at 2491.
Futures are red tonight over North Korea worry, but what we are looking for is a sharp decline to overlap the first leg up at 2454 SPX, so that waves 1 and 4 overlap just enough for a textbook E-D. The 5th wave would then put in a slight new high ahead of next week's FOMC.