Friday, February 3, 2012

MTU Weekend Ed. - Ready, Set , * * * ! (2/3/12 Close)

Bottom line -
[1] The current high in SP500 is near the end of a five wave run off the October December low, or wave iii of (iii) of [v] if wave [v] fully extends.
[2] A triple-three or leading diagonal structure of the Hope Rally off the 2009 low in SP500 projects a major turn date in early March (+/- 1 month) based on the fibonacci relationships within the proposed structure.

Details -
near term wave structure
SPX rose an impressive 2.17% this past week.  A 2.47% downward swing from 1333.47 to 1300.49 at the beginning of the week was short lived and the market rested itself for another push higher.  As a result, near term wave structures got increasingly discernible.  For example, Friday's high is likely ticks from the end of a larger five wave advance since the December low or wave iii of (iii) of [v] should wave (iii) of [v] decides to extend. See Chart 1 and Chart 2.

longer term counts - interesting Hope Rally fibs
Our primary tracking count in recent months describes the rally off the December low as a post triangle thrust C wave (Chart 3).   The 3rd-wave-like personality associated with this advance lends more support to a post-triangle thrust than a C wave of a zigzag off the October low.  This count remains on track, especially if the near term count highlighted above plays out.

However, as noted in Shifting Odds (1/20/12) and Squeezed (1/27/12),  with the Dow just a hair shy of a new recovery high and NDX already at its new recovery high for the Hope Rally,  odds continue to shift to  more suitable longer term counts.

For example, Shifting Odds (1/20/12) identified a long term bearish triple-three or bullish leading diagonal Hope Rally as top contenders.  Chart 4 refreshes.

On closer examination, one notes some interesting Fib relationships within the proposed triple-three/leading-diagonal.   

Chart 5 offers a count of the Hope Rally under this interpretation.  Note that wave [W] lasted 14 (= Fib13+1) months and wave [Y] lasted Fib 8 months. If wave [Z] should last a Fib 5 (+/- 1) months,  the projected end of the Hope Rally is early February (5-1 months) or early March (5 months) or early April (5+1 months).

While the Dow has effectively achieved the minimum price-level requirement under this proposed count, the broader market is lagging.   This implies that SPX could
[1] either truncate - but one shouldn't make premature assumptions,
[2] or experience another down-up subdivision with a potential truncation in INDU.  We have the Y2K experience  as a precedence - see chart 6 in Shifting Odds (1/20/12)