Seven

UPDATE 11:30am EST: As most of you know I did expect a pullback today – not another rally. However, whenever I’m a bit confused I simply start counting waves:

And guess what – I’m clearly counting seven, therefore, according to EWT rules, indicating that this is a corrective, not a motive wave. Quoting again psalm 54:3 of our bible:

Notice that while an impulse wave has a total count of 5, with extensions leading to 9 or 13 waves, and so on, a corrective wave as a count of 3, with combinations leading to 7 or 11 waves.

There you have it – so as strange as this might sound – today’s bullishness might actually be a sign of more bearishness to come. Thus I will watch the Zero and my favorite stochastics/MACD combo to load up on a light amount of index puts fairly soon.

UPDATE 12:20pm EST: Okay, I rarely revise a prior statement but I think this is appropriate. What I had failed to do this morning is to check the action in the COMPQ and it seems we’ve got some alerts flashing:

What I counted as a 1-2 in the SPX might actually be something else, judging by the COMPQ. Also, we breached through its prior 1, which is something that should not have happened in the current count. Now, listen rats – there are times when averages diverge and that’s fine and dandy and can often be ignored as long as the main trend is clear, but we cannot forget the stage we’re at right now.

• It’s OPEX week.
• Volatility will be at max.
• Quadruple witching this Friday.
• FOMC meeting on Tuesday and Wednesday.
• Either end of Primary {1} or onset of Primary {2}.
• We have a clear divergence in the averages.
• Unclear count on a minor wave degree at this point – looks like motive until we get a corrective wave.
• 5th up day in a row (thus far)

I don’t know rats, but I don’t want to get hit by a speeding train here. Thus, I would recommend that you close all but your favorite (and most clear) positions at this point. If you went short 30 minutes ago – take profits and wait things out. Yes, it’s likely that we drop from here after a 5th up day – should we get that today. And if you can play that and think you can outsmart the MMs – I strongly encourage you have fun. But I also believe that we should negotiate this tape very cautiously – there are too many variables at this point and remember – we are not gamblers – we are traders. Thus, my instincts and my cerebral cortex are screaming at me right now – telling me to stay out and wait for instructions.