The deeper sell-off this week, breaking through long-term support, means that if the ending-diagonal here is still in play, and we are headed to new highs, then we can no longer make it north of SPX 1750, at least on this count. Any higher than that would require this to morph into a new count, because wave 3 cannot be the shortest wave in the series.
Rough wave 3 - wave 5 equivalence would put us up at 1748 on October 31. My friend Pieter suggested today that something very, very important will happen during RTH that day, the sort of thing that would give us a vicious sell-off and a perfect topping candle. Can you guess what that might be?
|SPX 10-09 6M|
I don't normally like or chart the DJIA, but since Permabear Doomster mentioned its touch of the 200DMA today, I thought I should mention it. It looks like a broadening megaphone top, one of Dr. McHugh's Jaws of Death:
|DJIA 10-09 6M|
Of course, the pols will need to sort out their differences for us to make new highs, and I believe they will. Don't let any of this bother you! None of it matters, not even the ACA. It is meaningless and irrelevant where we are going. All of this vanishes in a puff of smoke when the $USD collapses.
The Yen may provide some additional support for the market in the meantime. Notice the wedge breakdown and kissback. It may be headed for new lows.
|Yen futures hourly|
Good luck to all, and may we have one more anemic, low-volume, completely self-conscious 5th wave up.
On the advice of a bookseller (I was scrounging for Richard Burton), I just finished reading Wilfred Thesiger's classic Arabian Sands, about his travels with the Bedouin tribesmen of the Arabian Peninsula and crossings of the Empty Quarter after World War 2. This is as good as travel writing gets, an incredible collection of tales. Burton's First Footsteps in East Africa is on-deck now.