Several EW analysts have taken a stab at labeling the wave structure on the SPX. Every one has completely missed the Broadening Top structure. As a result, they are mis-labeling the waves, IMO. Broadening Tops are known to be completely populated with corrective, a-b-c waves. That is still so, especially in the final thrust, which I have labeled.

This allows for a final thrust in Wave (v) of [c] before a breakdown. This also corresponds with today’s FOMC meeting and announcement at 2:00pm. In case you haven’t noticed, the market ALWAYS goes up into a FOMC announcement. Whether it is “buy the rumor and sell the news” or just simply the Fed liquidity pump in overdrive is hard for me to ascertain.

This is now the fourth Broadening Top formation since November 16. The problem is that none of the formations have been triggered. This one has the highest probability of being triggered, simply because the current Master Cycle is not yet finished at an appropriate low and this happens to be the longest Master Cycle I have seen. I would call it buyer fatigue. All of the ramps to new highs have been made on incredibly low (and successively lower) volumes. The declines are where we see the volume spikes, including the last hour of the day yesterday. Once the sellers become more eager, they will overwhelm the buyers. If this wave structure is correct as labeled, the top should come in between 1577.32 and 1580.90.

VIX is nearly at its Wace (C) bottom. It must make a marginal new low in the vicinity of 12.30 before punching higher. That has a high probability of happening this morning.

Regards,

Tony

Our Investment Advisor Registration is on the Web

We are in the process of updating our website at www.thepracticalinvestor.com to have more information on our services. Log on and click on Advisor Registration to get more details.

If you are a client or wish to become one, please make an appointment to discuss our investment strategies by calling Connie or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at tpi@thepracticalinvestor.com .

Anthony M. Cherniawski, President and CIO http://www.thepracticalinvestor.com

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only. There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

Anthony M. Cherniawski Archive

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.