Stocks followed the typical December seasonality (Seasonality(12/12/14)) and staged a Santa Rally, netting 4.97% for the SP-500 index and 4.73% for the Dow when measured from the December lows to Friday's high. Moreover, the small-cap Russell 2000 index achieved a higher high, hinting that other indexes are likely to follow and deliver new record highs. See Chart 1 and Chart 2.
If the market follows the historical pattern into the next week, the week of the 4th Friday in December is even more bullish as discussed last week. See Chart 3 and Chart 4.
We track the current rebound (tentatively) as wave (c)-up of [e]-up of the proposed expanding diagonal triangle in SP500. Under this interpretation, the December low is wave (b)-down of wave [e]-up (Chart 5). An alternative scenario is that wave (b)-down is not complete, a wave c-down of wave (b)-down to retest the December low should do the job.
The latter scenario would "buy" the market some time to finished the large expanding EDT in the March/April time frame discussed before. In both scenarios, current upside target remains at a marginal high above 2102.
Chart 6 and Chart 7 present the two scenarios at lower time frames. The blue count tracks the immediately bullish scenario and the green count tracks a potential retest of the December low.