Saturday, August 12, 2017

MTU Weekend Ed - Meaningful High (8/11/17 close)

SPX, once again, presents us with a potentially meaningful high (Chart 1).

We track the recent ATH as the end of a three (gray [C], blue and green [3]) or a five (red [5]) since the 2016 low.

Expect a meaningful pullback at least 2350 for wave [4]-down or much lower for a wave-two pullback at one larger degree or a reversal.

Expect a substantial rise in actual volatility in SPX if the spike in VIX is sustainable.  Otherwise VIX may be overbought near term. 

Current dynamic support levels (points for a potential rebound) are 2422, 2343, 2280 and 2215.

A near term bullish alternative interprets this past week's selloff as wave c-down of a (running?) flat wave (iv)* as outlined by the purple count  (or ii-down of the red (v)-up, not shown, if (v)-up decides to extend). A decline below the horizontal purple line invalidates this possibility.

MID broke its base trend line as noted by Mkt Man, suggesting wave [3] is complete.