10/12/11

The market has been up six of the past seven trading days.  Much hoopla has been made about sentiment, new bull market, still more bullishness on the way, etc.

If this is in fact a Primary-degree bear market, you should expect increased bearishness.  That means even during upward corrective swings, you should still see more bears than you would have during P[2/B/X].  Minor 2 of (1) of P[3] is not Intermediate (C) of P[2]!

I think we get marginally higher highs before a selloff either in [b].  At this point a .382 correction would not fill the gap at 1150.  A 50% correction, however, would.

This melt-up actually reminds me rather strongly of the push to 1356 back in early July, which was relentless but ultimately marked the top.  Also, a reminder that I consider the 1356 high on July 7 to be the orthodox top of P[2/B/X], making the move down only 3 months instead of 5.

Of concern to bears, however, has to be the fact that 30- and 60-minute RSI made new highs on higher SPX highs.  Of course, this could be because it's a correction (and some counts suggest it could actually be [c] of 2 rather than [a] of 2).  There's the possibility, in fact, that this push from 1074 may be the entirety of Minor 2, with an unclear or incomplete B wave.

Looking at it from an hourly chart, I see 7 waves complete, which suggests one more incrementally higher high (maybe around 1230?) before a correction.  Unless, of course, this move was only supposed to be 7 waves to begin with.

Also, remember that C waves don't have to end beyond the end of the A wave.