SPX has been in a messy consolidation inside a tight and narrowing range since late September. A breakout out of this range, potentially decisive, is inevitable at this point. Moreover, recent 3-wave gyrations (strongly) suggest a potential triangle may be at play. The challenge is that there are multiple potential triangles at play. So a picture is indeed worth a thousand words here. See Chart 1.
The blue and gray scenarios are appealing, subjectively speaking, for two reasons. First, it counts the recent mess as a triangle at a smaller degree which not only represents a better form but also the complex leg of a triangle. Second, the blue and gray scenarios are more time-consuming and are likely to complete at the resolution of the U.S. presidential election, which is timely.
Last but not least, Chart 2 tracks the upswing since the Feb low and shows how scenarios in Chart 1 can fit into the larger picture.
