And Pigs May Fly

I’ve got it all figured out – after today’s breach of 1123 it’s crystal clear now where we are:

The finale of the summer of pain is now only a few turns away – as you can clearly gather from the map. Just make a right after the next retracement, then straight up the ensuing melt up until you find yourself at the hellish gates of Mole’s Evil Castle. Watch out where you step – my moat is filled with hungry alligators who’ve got laser beams strapped to their heads. But as long as you’re a subscriber the rabid ninja mutants guarding the place should waive you right through. The rest of you guys, well – good luck.. 😉

I was faced with a bit of a predicament today. Which was that the current count on Soylent Green had a major flaw on the SPX as the Friday drop to 1088.01 distinctly breached the highs of 1088.96 which I had counted as a first wave up. So I basically have three choices here:

1. Ignore it as it only happened on the S&P – just fail to label it on the chart (done!) and hope that Ralph N. Elliott won’t spin in his grave.
2. Count it and expect a LOT more upside. Meaning that we are continuing to subdivide into 3-of-3 sub waves which will probably push us near this year’s highs. Not impossible I might add – but let’s not get ahead of ourselves.
3. Do what any self deprecating Elliottician would do: Pull the ole’ ‘ending diagonal’ out of one’s hat and hope you guys buy it.

Now seriously – an ending diagonal would not be misplaced as they can happen as c waves of a zigzag or a flat – go look it up. However, they are just so damn rare that I only relent into even bringing them up when I feel that no other count satisfies the highest probability based on my momentum measures. Which do suggest a bit more melt up but not all the way to 1200 – at least not right now.

In terms of labeling the thing nothing really has changed. We should probably bust a bit higher, then drop to 1130ish, followed by a final stab of the dagger into the collective heart of the bears shivering around 1160 – 1170 is not impossible.

So, where does that leave Soylent Blue? A bit on a limping leg, I fear. Today’s gap up was the call sign of a third wave and to expect the tape to turn right here is a bit silly IMNSHO. Yes, if I sniff enough rubber cement I can count it as a five wave motive which would satisfy the rules for a concluding {c} of a running flat. But as I said over the weekend – on the momo front (i.e. daily Zero, A/D ratio) nothing really that bearish is currently on the horizon. Yes it is ‘possible’ that we’ll see an A/D of 5.45 and then plunge into the abyss – right…

And pigs may fly. Possible in simulation (see above) but when you finally get your hands on refurbished NASA turboprops strapping them to the damn pigs is a lot messier than anticipated. Trust me – I have tried.

Bottom Line:

1088 – we need to breach that line before any downside should be taken seriously. Sure, you can start legging into short positions but buy enough damn theta to sit out any surprises to the upside. Which we may get – I don’t think the bulls are quitting right here and now. The good news: It’s August and the time cycle turning point is drawing near – but we are not there yet, at least another week to go – so stay nimble.

Cheers,

Mole