Friday, July 15, 2016

MTU Weekend Ed. - Breakout (7/15/16)

SP500 finally broke out of its 1-year range and closed at new record high (Chart 1). The gappy nature of this breakout suggest either strength or at least near term exhaustion (Chart 2). The prevalence of three-wave structures appears to favor the latter.

Furthermore, the above observation motivates one to keep track of potential intermediate term as well as short term triangles

Potential term triangles (Chart 3).
[green]  If the breakout is real,  wave [5]-up since the 2009 bottom may be an ending diagonal triangle.  The pending high is wave (A) or (C) of the proposed EDT.

[blue] The breakout is wave (B)-up of a triangle, which counts as wave [4]-down since the 2009 bottom.

[red] Wave [4]-down since the 2009 bottom is an expanding triangle. The pending high is its wave(D)-up.  Wave (E)-down is next to take out the Feb low.

Potential near term triangles (Chart 4).
[blue] Post-triangle-thrust C-up.
[green] Small-degree expanding triangle [b]-up of B-down.
[red] Terminal expanding triangle C-up.