Saturday, October 19, 2013

MTU Weekend Ed. - New High (10/18/13)

An 11th-hour temporary deal on budget funding and debt ceiling allows the U.S. government to resume spending and taking on additional debt, immediately. The market cheered as October options expire and a full moon rise. SP500 did not disappoint (see Showdown (10/11/13)), making a new all time high of 1745.31.

For the near term, we track SP500 as either finishing the impulse off the October low or somewhere in wave three of the proposed impulse (Chart 1).   Odds appear to favor the former as SP500 is showing negative divergence with its advance-decline lines (Chart 2), among other developments.  Closing the gap around 1735 next week likely indicate a retrace of the relief rally is in progress.

Taking into account of the recent price action, we identify the following top long term tracking scenarios.

[complex double three, Chart 3] SP500 is finishing up the final wave (c) of [Y] as indicated.

[123, Chart 4 green] The October low is (4)-down of [3]-up. Alternatively, the October low is [ii]-down of 5-up of (3)-up of [3]-up.

[ABC, Chart 4, red] The pending larger degree high is wave [C]-up of a larger [A][B][C] structure since the 2009 low.