SP500, along with Wilshire5000 and Nasdaq indexes made fresh Hope Rally highs this past week. The final advance toward the black point number 5 based on our Hope Rally model is likely in progress (Chart 1). Furthermore, a breakout from key 2011-2012 resistances is also in progress (Chart 2).
From a wave perspective, the current advance is likely wave 5 (which is terminal) with respect to the June low (Chart 3). The end of the advance coincides with the black point number 5 in our Hope Rally model.
With the breakout, the key questions are
(1) Where (and when) is the proposed wave 5 likely to end?
(2) Would the associated black point number 5 complete the Hope Rally or are there point-6-down and point-7-up to follow?
As discussed in Hope Rally Update (8/31/12), a potential timing of the black point number 5 is likely early October (+/-). With the current advance now getting overbought, the pending high is likely in the vicinity of current levels and unlikely to make it to an all-time high. Whether wave 5 extends remains to be seen.
 The breakout is yet to be confirmed by the Dow, mid-caps (SP400) , small caps (Russell 2000) and transports.
 The negative divergence with respect to market internals continues to exist (Chart 4 above).
 Realized volatility (not implied) is getting “extremely” low.
 NDX is again at trend-channel resistance and the current advance can be interpreted as terminal within its long term wave structure (Chart 5, blue).